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CHAPTER I General Provisions
Article 1
The term "company" as used in this Act denotes a corporate juristic person organized
and incorporated in accordance with this Act for the purpose of profit making.
When conducting its business, every company shall comply with the laws and regulations
as well as business ethics and may take actions which will promote public interests in
order to fulfill its social responsibilities.
Article 2
Companies are of four classes as set forth in the following:
1.Unlimited Company: which term denotes a company organized by two or more shareholders
who bear unlimited joint and several liabilities for discharge of the obligations of
the company.
2.Limited Company: which term denotes a company organized by one or more shareholders,
with each shareholder being liable for the company in an amount limited to the amount
contributed by him.
3.Unlimited Company with Limited Liability Shareholders: which term denotes a company
organized by one or more shareholders of unlimited liability and one or more shareholders
of limited liability; among them the shareholder(s) with unlimited liability shall bear
unlimited joint liability for the obligations of the company, while each of the
shareholders with limited liability shall be held liable for the obligations of the
company only in respect of the amount of capital contributed by him.
4.Company Limited by Shares: which term denotes a company organized by two or more
or one government or corporate shareholder, with the total capital of the company being
divided into shares and each shareholder being liable for the company in an amount
equal to the total value of shares subscribed by him.
The name of a company shall indicate the class to which it belongs.
Article 3
The domicile of a company is the location of its head office.
The term "head office" as used in this Act denotes the principal office first
established according to law to take charge of affairs of the entire organization;
the term "branch office" denotes branch unit subject to the control of the head office.
Article 4
The term "foreign company" as used in this Act denotes a company, for the purpose of
profit making, organized and incorporated in accordance with the laws of a foreign
country.
A foreign company, within the limits prescribed by laws and regulations, is entitled
with the same legal capacity as a R.O.C. company.
Article 5
The term "Competent authority" as used in this Act shall denote the Ministry of
Economics Affairs where the central government is concerned; or the Bureau of
Reconstruction where a municipal government under the jurisdiction of the Executive
Yuan is concerned.
The central competent authority may authorize its subordinate authority (authorities)
or mandate or appoint other government authority (authorities) to handle the matter(s)
set forth in this Act.
Article 6
No company may be incorporated unless it has registered with the central competent authority.
Article 7
The capital amount of a company applying for registration of incorporation shall be
audited by an independent certified public accountant; such company shall attach an
auditing certificate from an independent certified public accountant when applying for
registration of incorporation or within 30 days after the registration of incorporation.
The capital amount of a company applying for alteration of the registered capital amount
shall first be audited by an independent certified public accountant.
Regulations governing the process set forth in the two preceding paragraphs shall be
prescribed by the central competent authority.
Article 8
The term "responsible persons" of a company as used in this Act denotes shareholders
conducting the business or representing the company in case of an unlimited company
or unlimited company with limited liability shareholders; directors of the company
in case of a limited company or a company limited by shares.
The managerial officer, liquidator or temporary manager of a company, the promoter,
supervisor, inspector, reorganizer or reorganization supervisor of a company limited
by shares acting within the scope of their duties, are also responsible persons of
a company.
A non-director of a company who de facto conducts business of a director or de facto
controls over the management of the personnel, financial or business operation of the
company and de facto instructs a director to conduct business shall be liable for the
civil, criminal and administrative liabilities as a director in this Act, provided,
however, that such liabilities shall not apply to an instruction of the government to
the director appointed by the government for the purposes of economic development,
promotion of social stability, or other circumstances which can promote public interests.
Article 9
Where the share prices (or the capital stock) receivable by a company have not been
actually paid up by its shareholders, but are declared as having paid up in its
incorporation application, or where the share prices have been paid up by its shareholders
but are subsequently refunded to its shareholders or withdrawn by such shareholders
with the permission of the company after having completed the procedures for company
incorporation, the responsible persons shall each be punished with imprisonment for
a term of not more than five years, detention, or in lieu thereof or in addition
thereto a fine in an amount of not less than NT$ 500,000 but not more than NT$ 2,500,0000.
Under any of the circumstances set forth in the preceding Paragraph, the responsible
persons shall be liable, jointly and severally with such shareholders, for the damages
to be sustained by the company or the third party or parties there-from.
Upon conviction of the punishment set out in Paragraph I hereinabove, the central
competent authority shall cancel or nullify the original registration of that company,
provided, however, that the provision set out in this Paragraph shall not apply in
case the unlawful act has been rectified by the company before the judgment becomes final.
After the responsible persons, agents, employees or other personnel have been convicted
the crime of Offenses of Forging Instruments or Seals in the Chapter of the Criminal Code
in filing an application for registration of its company incorporation or other company
alterations,the central competent authority shall,ex officio or upon an application filed
by an interested party, cancel or nullify such registration of the said company.
Article 10
Under either of the following circumstances, the competent authority may, ex officio
or upon an application filed by an interested party, order the dissolution of a company:
1.Where the company fails to commence its business operation after elapse of six months
from the date of its company incorporation registration, unless it has made an extension
registration;or
2.Where, after commencing its business operation, the company has discontinued,at its own
discretion, its business operation for a period over six months, unless it has made the
business discontinuation registration.
3.Where a final judgment has adjudicated to prohibit the company from using its company
name, the company fails to make a name change registration after elapse of six months from
the final judgment, and fails to make a name change registration after the competent
authority has ordered the company to do so within a given time limit.
4.Where the company fails to attach the auditing certificate from an independent certified
public accountant within the time period prescribed in Paragraph 1 of Article 7, provided,
however, that this shall not apply, if the company has attached such auditing certificate
before the competent authority orders a dissolution of the company.
Article 11
In the event of an apparent difficulty in the operation of a company or serious damage
thereto, the court may, upon an application from its shareholders and after having
solicited the opinions of the competent authority and the central authority in charge
of the relevant end enterprises and having received a defence from the company, make
a ruling for the dissolution of the company.
The dissolution application to be filed by the company under the preceding Paragraph
shall be filed by shareholders who have been continuously holding more than 10% of the
total number of outstanding shares issued by the company for a period over six months.
Article 12
In a company, after its incorporation, fails to register any particular that should have
been registered or fails to register any changes in particulars already registered, such
particulars or changes in particulars cannot be set up as a defence against any third party.
Article 13
A company shall not be a shareholder of unlimited liability in another company or a
partner of a partnership enterprise.
When a public company becomes a shareholder of limited liability in other companies,
the total amount of its investments in such other companies shall not exceed forty
percent of the amount of its own paid-up capital unless it is a professional investment
company, or otherwise provided for in its Article of Incorporation, or has obtained
the consent of a resolution adopted, at a shareholders’ meeting, by a majority of
the shareholders present who represent two-thirds or more of the total number of its
outstanding shares.
In the event the total number of shares represented by the shareholders present at a
shareholders’ meeting is less than the percentage of the total shareholdings required
in the preceding Paragraph, the resolution may be adopted by two-third of the voting
rights exercised by the shareholders present at the shareholders’ meeting who represent
a majority of the outstanding shares of the company.
Where there is any higher percentage of the total number of shares represented by the
shareholders present and/or the total number of the voting rights required in the
Articles of Incorporation, such higher percentage shall prevail in the preceding two
paragraphs.
Shares received by a company as a result of distribution of surplus earnings or
capitalization of legal reserves by its invested company shall not be included in the
total amount of investments set forth in Paragraph Two of this Article.
The responsible person of a company who has violated the provisions of Paragraph One
or Two of this Article shall be liable for the damages incurred by the company there-from.
Article 14
(Deleted)
Article 15
Unless otherwise under any of the following circumstances, the capital of a company
shall not be lend to any shareholder of the company or any other person:
1.Where an inter-company or inter-firm business transaction calls for such lending
arrangement;or
2.Where an inter-company or inter-firm short-term financing facility is necessary
provided that the amount of such financing facility shall not exceed forty percent
of the amount of the net value of the lending enterprise.
The responsible person of a company who has violated the provisions of the preceding
Paragraph shall be liable, jointly and severally with the borrower, for the repayment
of the loan at issue and for the damages, if any, to company resulted there-from.
Article 16
A company shall not act as a guarantor of any nature, unless otherwise permitted by
any other law or by the Articles of Incorporation of the company.
The responsible person who has violated the provision set out in the preceding Paragraph
shall take up the surety-ship on his own and shall be liable for the damages, if any,
to the company resulted there-from.
Article 17
If the business of a company should require special permission of the government
in accordance with the law or an order given by a competent authority duly
authorized by the law, such company may apply for company registration only after
having received the foregoing government permission document.
Where revocation or rescission of a business permit granted under the preceding
Paragraph becomes final, the government authority in charge of the relevant
end-enterprise shall advise, by a notice, the central competent authority to
cancel or to nullify the company registrations, in whole or in part, previously
made by the said company.
Article 17-1
Where a company was operated in a manner in violation of the governing laws and/or
regulations and is ordered, by a conclusive injunction, to closedown, the authority
giving such injunction shall notify the central authority to cancel the company
registrations, in whole or in part, previously made by the said company.
Article 18
A corporate name shall be in Chinese Character. No company may use a corporate
name which is identical with that of another company or limited partnership. Where
the corporate names of two companies or a company and limited partnership contain
any marks or identifying words respectively that may distinguish the different
categories of business of the two companies, such corporate names shall not be
considered identical with each other.
A company may conduct any business that is not prohibited or restricted by the
laws and regulations, except for those requiring special approvals which shall
be explicitly described in the Articles of Incorporation of the company.
Any category of business to be conducted by a company shall, when making the
registration thereof, be identified with the Category Code applicable to the
said business category as assigned in the Table of Categories of Businesses
by the central competent authority. For a company which has already been
registered, and the category of business conducted by it is registered with
descriptive words, then, such descriptive words shall be replaced with the
applicable Category Code as assigned in the foregoing Table, while applying
for alteration of the entries of existing company registration record.
A company shall not use a name which tends to mislead the public to associate
it with the name of a government agency or a public welfare organization, or
has an implication of offending against public order or good customs.
Before proceeding to the company incorporation registration procedure, a company
shall first apply for approval and reservation, for a specific period of time,
of its corporate name and the scope of its business. Rules for examination and
approval of such application shall be prescribed by the central competent authority.
Article 19
A company may not conduct its business operations or commit any juristic act
in the name of its company, unless it has completed the procedure for company
incorporation registration.
The person who has violated the provision set out in the preceding Paragraph
shall be punished with imprisonment for a period of not more than one year,
detention, or in lieu thereof or in addition thereto a fine of not more
than NT$ 150,000 and shall assume on his own the civil liabilities arising
there-from, or shall be jointly and severally liable therefore, in case there
are two or more violators. In addition, the company shall be enjoined from using
its corporate name for doing its business.
Article 20
A company shall, at the end of each fiscal year, submit to its shareholders
for their approval or to the shareholders’ meeting for ratification the annual
business report, the financial statements, and the surplus earnings distribution
or loss make-up proposal.
Where a company's equity capital exceeds a certain amount or a company's equity
capital does not exceed a certain amount but the company is with a certain scale,
the company shall first have its financial statements audited and certified by a
certified public accountant. Such certain amount, scale as well as auditing and
certification rules shall be prescribed by the central competent authority. The
provision set out in this Paragraph shall not apply to the companies whose stocks
are offered in public and which are subject to the provisions otherwise stipulated
by the competent authority in charge of securities affairs.
The provisions of Paragraph One, Article 29 of this Act shall apply, mutatis mutandis,
to the appointment, discharge and remuneration of the certified public accountant
set forth in the preceding Paragraph.
The competent authority may, at any time or from time to time, send its officer(s)
to examine or may require, by an order, a company to submit, within a given time limit,
the documents and statements set forth in Paragraph I under this Article in accordance
with the regulations to be prescribed by the central competent authority.
Upon violation the provisions set out respectively in the preceding Paragraphs I
or II, the responsible person of the violating company shall be imposed with a fine
of not less than NT$ 10,000 but not more than NT$ 50,000; or shall be imposed with
a fine of not less than NT$ 20,000 but not more than NT$ 100,000 if the company evades,
impedes, or refuses the foregoing examination or fails to make the submission thereof
after expiry of the deadline date.
Article 21
The competent authority may, in conjunction with the authority in charge of the end
enterprise concerned, at any time or from time to time, send their respective officials
to inspect the operation and financial conditions of a company, to which the responsible
person of the company shall not impede, refuse or evade.
The responsible person of a company who impedes, refuses or evades the inspection set
forth in the preceding Paragraph shall be imposed with a fine of not less than
NT$ 20,000 but not more than NT$ 100,000. For successive acts in terms of impeding,
refusing or evading such inspection, the responsible person of a company shall be
imposed successively in each case a fine of not less than NT$ 40,000 but not more
than NT$ 200,000.
When sending its official to conduct the inspection as set forth in Paragraph I
of this Article, the competent authority may, depending on actual requirement,
appoint a certified public accountant, a lawyer or any other professional personnel
to assist in carrying out such inspection.
Article 22
In examining the documents and statements submitted by a company under Article 20
or in inspecting the operation and financial conditions of a company under the
preceding Article, the competent authority may order the company to present evidential
documents, vouchers, books and statements and other relevant information, but shall,
unless otherwise provided for by law, keep the same as confidential information;
and shall complete the examination and return the same to the company within fifteen
days after its receipt thereof.
The responsible person of a company who has violated the provisions of the preceding
Paragraph by refusing to provide such information shall be imposed with a fine of
not less than NT$ 20,000 but not more than NT$ 100,000. For successive act in terms
of refusing to provide the information required, the responsible person of a company
shall be imposed in each case a fine of not less than NT$ 40,000 but not more
than NT$ 200,000.
Article 22-1
A company shall report annually the names, nationalities, birthdays, or the dates of
its incorporation registration, identification numbers, numbers of shareholding or
capital contribution, and other items as required by the central competent authority
of its directors, supervisors, managerial officers, and shareholders holding more
than 10 percent of the total shares of a company to the information platform
established or designated by the central competent authority by way of electronic
transmission. If there is any change of the above items, the company shall, within
15 days after such change date, report such change to the information platform,
provided, however, that such report shall not apply to a company with certain
qualifications.
The central competent authority shall check periodically the information reported
according to the preceding paragraph.
Regulations governing the establishment or designation of information platform,
reporting period and format of such information, scope of managerial officers, scope
of companies with certain qualifications, collection, process, use of information and
fees thereof, and contents of the items required set forth in Paragraph One, as well
as the checking procedure and method as provided in the preceding paragraph and other
matters for compliance shall be prescribed by the central competent authority with
the collaboration of the Ministry of Justice.
A company fails to report or the information reported is misrepresented according
to Paragraph One, the central competent authority shall notify the company to rectify
its law violating act within a given time limit; and if the company fails to take
corrective action beyond the given time limit, the director representing the company
shall be imposed with a fine of not less than NT$ 50,000 but not more than NT$ 500,000;
and if the company still fails to take corrective action beyond the second given time
limit, the director representing the company shall be imposed with a fine of not less
than NT$ 500,000 but not more than NT$ 5,000,000 consecutively for each non-compliance
until the law violating act is rectified. If the violating act is material, the central
competent authority may nullify its incorporation registration.
Under the circumstances of the preceding paragraph, the information platform set
forth in Paragraph One shall take note of the violating act and punishment imposed
for each time.
Article 23
The responsible person of a company shall have the loyalty and shall exercise the due
care of a good administrator in conducting the business operation of the company; and
if he/she has acted contrary to this provision, shall be liable for the damages to be
sustained by the company there-from.
If the responsible person of a company has, in the course of conducting the business
operations, violated any provision of the applicable laws and/or regulations and thus
caused damage to any other person, he/she shall be liable, jointly and severally, for
the damage to such other person.
In case the responsible person of a company does anything for himself/herself or on
behalf of another person in violation of the provisions of Paragraph 1, the meeting
of shareholders may, by a resolution, consider the earnings in such an act as earnings
of the company unless one year has lapsed since the realization of such earnings.
Article 24
A dissolved company shall be liquidated, unless such dissolution is caused by
consolidation or merger, split-up, or bankruptcy.
Article 25
A dissolved company in the process of liquidation shall be deemed as not yet dissolved.
Article 26
A dissolved company as referred to in the preceding article may, during the period
of liquidation, temporarily transact its business for the purpose of settling pending
affairs and facilitating the liquidation.
Article 26-1
Where the official registrations of a company are cancelled or invalidated by
the central competent authority, the provisions set out in the preceding three
Articles shall apply mutatis mutandis.
Article 26-2
In case a company which has been dissolved, cancelled or nullified its registration,
its corporate name can be approved to be used by others’application without subject
to the restriction set forth in Paragraph 1 of Article 18, if the company has not
completed its liquidation after 10 years from the date of its dissolution,
cancellation, or nullification of its registration; or if the company has not
been adjudicated by court to end its bankruptcy after 10 years from the date of
its bankruptcy registration, provided, however, that the restriction set forth
in Paragraph 1 of Article 18 still applies if the company obtains an approval
with good cause from the central competent authority 6 months before the
expiration of such 10-year period.
Article 27
Where a government agency or a juristic person acts as a shareholder of a company,
it may be elected as a director or supervisor of the company provided that it shall
designate a natural person as its proxy to exercise, in its behalf, the duties of
a shareholder.
Where a government agency or a juristic person acts as a shareholder of a company, its
authorized representative may also be elected as a director or supervisor of the
company. If there is a plural number of such authorized representatives, each of them
may be so elected, but such authorized representatives may not concurrently be selected
or serve as the director or supervisor of the company.
Any of the authorized representatives of a company referred to in Paragraphs I and II
of this Article may, owing to the change of his/her functional duties, be replaced by
a person to be authorized by the company so as to fulfill the unexposed term of office
of the predecessor.
Any restriction placed upon the power or authority of the authorized representatives
set forth in Paragraph I and Paragraph II of this Article shall not be set up as
a defense against any bona fide third party.
Article 28
Any and all public announcements to be made by a company shall be published in a
newspaper or electronic newspaper.
Under the circumstance of the preceding paragraph, the central competent authority
may establish or designate a website for public announcements.
For the preceding two paragraphs, a public company shall comply with the provisions
otherwise prescribed by the competent authority in charge of securities affairs.
Article 28-1
Where service of any official document which should be served to a company may
be executed by way of electronic transmission.
Where service of any official document which should be served to a company can
not be executed for any reason, such official document may be served on the
responsible person of the said company. If the service still can not be executed,
a public notice of such official document may be made instead.
Regulations governing the service by way of electronic transmission shall be
prescribed by the central competent authority.
Article 29
A company may have one or more managerial personnel in accordance with its Articles
of Incorporation. Appointment and discharge and the remuneration of the managerial
personnel shall be decided in accordance with the following provisions provided,
however, that if there are higher standards specified in the Articles of Incorporation,
such higher standards shall prevail:
1.In the case of an unlimited company or an unlimited company with limited liability
shareholders, it shall be decided by a majority of all shareholders with unlimited
liability;
2.In the case of a limited company, it shall be decided by a majority of voting
shares of all shareholders;
3.In the case of a company limited by shares, it shall be decided by a resolution
to be adopted by a majority vote of the directors at a meeting of the board of
directors attended by at least a majority of the entire directors of the company.
Under the circumstance of Article 156-4, the competent authority of special approval
shall require the company participating in the governmental special bailout program
to provide with a self-help plan and may restrict the remuneration of the managerial
personnel of such company or impose other necessary restrictions or disposal on such
company in accordance with the regulations to be prescribed by the central competent
authority.
Article 30
A person who is under any of the following circumstances shall not act as a
managerial personnel of a company. If he has been appointed as such, he shall
certainly be discharged:
1.Having committed an offence as specified in the Statute for Prevention of
Organizational Crimes and subsequently convicted of a crime, and has not started
serving the sentence, has not completed serving the sentence,or five years have
not elapsed since completion of serving the sentence, expiration of the probation,
or pardon;
2.Having committed the offence in terms of fraud, breach of trust or misappropriation
and subsequently convicted with imprisonment for a term of more than one year, and
has not started serving the sentence,has not completed serving the sentence, or
two years have not elapsed since completion of serving the sentence, expiration
of the probation,or pardon;
3.Having committed the offense as specified in the Anti-corruption Act and
subsequently convicted of a crime, and has not started serving the sentence, has
not completed serving the sentence, or two years have not elapsed since completion
of serving the sentence, expiration of the probation, or pardon;
4.Having been adjudicated bankrupt or adjudicated of the commencement of liquidation
process by a court, and having not been reinstated to his rights and privileges;
5.Having been dishonored for unlawful use of credit instruments, and the term of
such sanction has not expired yet; or
6. Having no or only limited disposing capacity.
7. Having been adjudicated of the commencement of assistantship and such assistantship
having not been revoked yet.
Article 31
The scope of duties and power of managerial personnel of a company may, in addition
to what are specified in the Articles of Incorporation, also be defined in the
employment contract.
A managerial personnel shall be empowered to manage the operation of the company
and to sign relevant business documents for the company, subject to the scope of
his/her duties and power as specified in the Articles of Incorporation or his/her
employment contract.
Article 32
A managerial personnel of a company shall not concurrently act as a managerial
personnel of another company, nor shall he/she operate, for the benefit of his/her
own or others, any business which is the same as that of the company employs him/her,
unless otherwise concurred in by the company pursuant to the provisions of Paragraph
One, Article 29 hereof.
Article 33
A managerial personnel shall not make any change or alteration in any decision made
by the directors or the executive shareholder(s), or any resolution adopted by the
shareholders' meeting or the board of directors, or go beyond the scope of his/her
duties and power when exercising his/her functional duties.
Article 34
A managerial officer who violates any provision of laws or ordinances, or of
Articles of Incorporation, or of the preceding article, thereby causing loss or
damage to the company, shall be liable to compensate the company.
Article 35
(deleted)
Article 36
Any restriction imposed by a company on the duty and power of managerial officers
is not valid as defence against a bona fide third person.
Article 37
(Deleted)
Article 38
(Deleted)
Article 39
(Deleted)
CHAPTER II Unlimited Company
Section 1.Formation
Article 40
An unlimited company shall have two or more shareholders, and at least one half
of them shall each have a domicile within the territory of the Republic of China.
The shareholders of a company shall, by unanimous agreement, draw up the articles
of incorporation for the company and shall affix their respective signatures or
personal seals thereon. The Articles of Incorporation shall be kept by the company,
and one duplicate thereof shall be held by each shareholder respectively.
Article 41
The Articles of Incorporation of an unlimited company shall contain the following
particulars:
1.The name of the company;
2.The scope of business to be conducted;
3.The name, domicile or residence of each shareholder;
4.The total amount of capital stock and the equity capital contributed by each shareholder;
5.The form, quantity, value or appraisal standards of the value of the property other than
cash contributed as equity capital by shareholders, if any;
6.The ratio or standards for profit distribution and loss apportionment among shareholders;
7.The location of the head office and the branch office(s), if any;
8.The name of the shareholder designated to represent the company, if any;
9.The name of the shareholder(s) who is (are) designated to conduct the business operations
of the company, if any;
10.The cause of dissolution of the company, if defined; and
11.The date of execution of the Articles of Incorporation.
In case the Articles of Incorporation is not made available at the head office of a company,
the shareholder who is designated to represent the company shall be imposed with a fine in
an amount not less than NT$ 10,000 but not more than NT$ 50,000. For consecutive refusals
to prepare and made available of the Articles of Incorporation, a fine in an amount not less
than NT$ 20,000 but not more than NT$ 100,000 shall be imposed each time of such consecutive
violation.
Section 2.Internal Relations of a Company
Article 42
The internal relations of a company, unless otherwise provided by law, may be prescribed
in the Articles of Incorporation.
Article 43
A shareholder may contribute his capital in the form of service or other rights, and has
to comply with the provisions in Article 41, paragraph 1, item 5.
Article 44
A shareholder who contributes capital by assigning a monetary claim which is not
satisfied upon maturity, shall make good the loss and be liable to compensate the
company for any damage or loss in consequence thereof.
Article 45
Each shareholder shall have the right to conduct the business of the company and
be responsible thereof, but in case the Articles of Incorporation provide for one
of several of the shareholders to conduct the business, then that provision shall
prevail.
More than one-half of the shareholders who conduct the business as mentioned in
the preceding paragraph shall have domiciles within the territory of the Republic
of China.
Article 46
When several or the whole body of shareholders are conducting the business a
company, then decisions shall be carried out by a majority vote.
Each shareholder who conducts the business of a company may act independently
in all ordinary affairs, provided that in any matter in which any one of the
other shareholders who also conducts company business objects, such objection
shall be followed immediately by stopping any further proceeding in the matter.
Article 47
Any modification or alteration in the Articles of Incorporation of a company
shall be agreed upon by all of the shareholders.
Article 48
Shareholders who do not conduct business may, at any time, require shareholders
who conduct business to furnish information on the business condition of the
company and examine its assets, documents, books and statement.
Article 49
A shareholder who conducts business shall not claim remuneration from the company
unless there is special agreement to that effect.
Article 50
Shareholder who advance money while conducting the business of the company may
demand from the company reimbursement and payment of interest on the sum or sums
thus advanced; where a debt is incurred and such debt has not yet matured, he may
request the company to furnish appropriate security.
A shareholder who suffers loss or damage through no fault of his own in the
course of conducting business may claim compensation from the company.
Article 51
When the Articles of Incorporation provide for one or several of the shareholders
to conduct business, such shareholder or shareholders shall not resign without
cause nor can other shareholders cause him or them to retire without cause.
Article 52
A shareholder shall conduct business in accordance with laws and ordinances,
Articles of Incorporation, and decisions of the shareholders.
A shareholder who acts in violation of the aforesaid provision thereby causing
loss or damage to the company, shall be liable to compensate the company.
Article 53
A shareholder who receives money on behalf of the company and does not turn
in the said sum within a reasonable period of time, or appropriates the sum
for his own use, shall repay the said money with interest and compensate the
company for any loss or damage sustained thereby.
Article 54
A shareholder, without the unanimous consent of all other shareholders,shall
not be a shareholder of unlimited liability of another company or a partner in
a partnership business.
A shareholder who conducts business of the company, shall not, on his own
account or on behalf of another, engage in the same business as that of
the company.
In case a shareholder who conducts business of the company violates the
provisions of the preceding paragraph, all other shareholders may, by a majority
of vote, consider the earnings in such an act as earnings of the company unless
one year has lapsed since the realization of such earnings.
Article 55
A shareholder, without the unanimous consent of all other shareholders, shall
not transfer to another person all or a part of his contribution to the capital
of the company.
Section 3.External Relations of a Company
Article 56
A company may, by its Articles of Incorporation, designate one or more shareholders
to represent the company, and in the absence of such a provision each shareholder
may represent the company.
The provision of Article 45, Paragraph 2, shall apply mutatis mutandis to the
shareholder or shareholders who represent the company.
Article 57
A shareholder who represent the company shall have power to conduct all affairs
pertaining to the business of the company.
Article 58
Any restriction imposed by the company power of representation of a shareholder
cannot be set up as a defence against a bona fide third person.
Article 59
When a shareholder who represents the company buys or sells, lends or leases,
or does any juristic act vis-a-vis the company on his own account or on behalf
of another, he shall not at the same time represent the company; however, the
repayment of debt to the company shall be excepted.
Article 60
When the assets of the company are not sufficient to meet its liabilities, the
shareholders shall be jointly liable.
Article 61
Any one who becomes a shareholder of a company shall also be liable for the
liabilities of the company contracted prior to his being shareholder.
Article 62
Any one who is not a shareholder, but leads other to believe that he is a shareholder,
shall have the liabilities vis-a-vis a bona fide third person as though he were
a shareholder.
Article 63
A company, unless losses have been covered, shall not make distribution of surplus profit.
Responsible persons of the company, acting in violation of the aforesaid provision, shall
be severally subject to imprisonment not exceeding one year, detention, or singularly
or in addition thereto a fine not exceeding NT$60,000.
Article 64
A debtor of a company cannot set off his debt to the company against his claim
vis-a-vis a shareholder.
Section 4.Withdrawal of Shares
Article 65
In case the continuance of existence of a company is not specified in its Articles
of Incorporation, and except that the rules for withdrawal of share capital are
otherwise established, any shareholder of the company may withdraw his/her share
capital upon close of each fiscal year, provided that a six-month prior notice of
such intent in writing shall be given to the company.
A shareholder may, upon occurrence of a significant cause not attributable to him/her,
withdraw his/her share capital at any time, regardless whether or not the continuance
of existence of the company has been specified in its Articles of Incorporation.
Article 66
In addition to the cases mentioned in the preceding article, every shareholder
shall cease to be one under any of the following circumstances:
1.The occurrence of a condition for withdrawal of shares stipulated in the Articles
of Incorporation;
2.Death;
3.Bankruptcy;
4.Adjudication of the commencement of guardianship or assistantship;
5.Expulsion; and
6.Compulsory execution of the shareholder's contribution to the capital by the court.
Where a shareholder shall cease to be one under item 6 of the preceding Paragraph,
the execution court shall notify the company and other shareholders two months in
advance of the compulsory execution.
Article 67
A shareholder may, by unanimous agreement of all other shareholders,be expelled
under any of the following circumstances:
1.Inability to contribute the capital which should have been contributed or failure
to do so despite repeated demand;
2.Violation of the provisions of Article 54 Paragraph 1;
3.Improper conduct detrimental to the interest of the company; and
4.Failure to attend to important duties of the company; however, such expulsion
shall not be valid in respect of such a shareholder until after due notice has
been given.
Article 68
If the name of a company contains the surname or a full name of a shareholder,
such shareholder may, upon withdrawal of his shares, request the company to
discontinue the use of his name.
Article 69
The settlement of account of a retiring shareholder shall be based on the financial
condition of the company at the time of his withdrawal.
The contribution of the retiring shareholder shall, whatever the nature of his
contribution, be repaid in cash.
If, at the time of withdrawal, certain affairs of the company have not yet
been concluded, then allocation of a retiring shareholder's share of profit
and loss shall only be made after the due conclusion of such affairs.
Article 70
For withdrawal of share capital, a shareholder of a company shall file an
application for share capital withdrawal with the competent authority for
registration thereof, and shall, within two years after such withdrawal
registration, stay liable, jointly and severally and without limitation, for the
liabilities incurred by the company.
The provisions set out in the preceding Paragraph shall apply mutatis mutandis, to the
shareholder of a company transferring his/her capital contribution.
Section 5.Dissolution, Consolidation or Merger and Reincorporation
Article 71
A company shall be dissolved under any of the following circumstances:
1. The occurrence of the conditions for dissolution stipulated in the Articles of
Incorporation;
2. The accomplishment or impossibility of accomplishment of the purpose for which
the company has been formed;
3. Approval by two thirds or more of all shareholders;
4. The reduction of the number of shareholders to a number below the minimum required
by this Act;
5. Consolidation or merger with another company;
6. Bankruptcy; or
7. Order or judgment for dissolution.
In such cases as specified in items 1 and 2 of the aforesaid paragraph, if all or a part
of the shareholders agree to continue the business, they may so continue, and those
disagreed are deemed to be retired.
In the case specified in Item 4 of Paragraph 1, new shareholders may join the company
to continue the business.
In case of continuation of the business under the circumstances specified in the
two preceding paragraphs, the Articles of Incorporation shall be modified.
Article 72
A company may, with the unanimous agreement of all shareholders, consolidate or
merge with another company.
Article 73
A company shall, upon adoption of a resolution to enter into the process of company
merger or consolidation, prepare a balance sheet and an inventory of property.
A company shall, after having resolved to enter into the process of company merger or
consolidation, give a notice to each creditor of the company as well as a public notice
of such resolution, and shall fix a time limit of not less than thirty (30) days
within which the creditors may raise their objections, if any, to such resolution.
Article 74
A company which fails to give the individual notice or the public notice or to settle
its liabilities with or to provide an appropriate security for the claims of the
creditors who have made objections within the time limit fixed under the preceding
Paragraph shall not set up the company merger or consolidation resolution as a
defence against such creditors.
Article 75
Rights and obligations of a company ceasing to exist after consolidation or merger shall
be assumed by the surviving or new company.
Article 76
A company may, with unanimous agreement of all shareholders, change a part of its
shareholders to shareholders with limited liability or admit shareholders of limited
liability and reincorporate it into an unlimited company with limited liability
shareholders.
The provisions of the aforesaid paragraph shall mutatis mutandis apply to a company
continuing business in accordance with the provisions of Article 71, Paragraph 3.
Article 76-1
A company may reincorporate into a limited company or a company limited by shares with
the approval by two thirds or more of all shareholders to modify its Articles of Incorporation.
Under the circumstance of the preceding paragraph, the dissenting shareholders may withdraw
his/her share capital by giving a written notice to the company.
Article 77
The provisions of Article 73 to 75 shall mutatis mutandis apply to the reincorporation
of a company under the preceding two articles.
Article 78
The shareholders who become shareholders of limited liability under Article 76,
Paragraph 1 or Article 76-1, Paragraph 1, shall still bear joint and unlimited
responsibility for the obligations which the company acquired prior to its
reincorporation, for a period of two years following registration of such reincorporation.
Section 6.Liquidation
Article 79
Unless otherwise provided in this Act or in the Articles of Incorporation or unless
liquidators are otherwise appointed by a resolution adopted by the shareholders,
liquidation of a company shall be undertaken by all of its shareholders.
Article 80
In the event of death of a member of the shareholders during a time of liquidation
undertaken by all of them, participation of the deceased in the liquidation shall
be undertaken by his successor. If there are several successors one of them shall
be nominated from among themselves.
Article 81
In case a liquidator or liquidators cannot be determined in accordance with the
provisions of Article 79, the court may, upon application by a concerned party,
appoint a liquidator or liquidators.
Article 82
The court may, if it deems it necessary, upon the application of a concerned
party, remove the liquidator; however, a liquidator chosen by shareholders may
also be removed by a majority vote of the shareholders.
Article 83
A liquidator shall, within fifteen days after having assumed office, file a report
to the court, setting forth his name, domicile or residence, and the date on which
he assumed office.
The removal of a liquidator shall be reported to the court by the shareholders
within fifteen days.
When a liquidator is appointed by the court, public announcement shall be made,
and the same procedure shall be followed when a liquidator is removed.
A person who fails to comply with the time-limit for filing a report as provided
for in Paragraph 1 or Paragraph 2 shall be subject to a fine of not less
than NT$3,000, but no more than NT$15,000.
Article 84
The duties of a liquidator are as follows:
1.To wind up all pending business;
2.To collect all outstanding debts and to pay off all claims;
3.To allocate surplus or loss; and
4.To allocate the residual assets.
The liquidator in performing the aforesaid duties shall have the power to act
on behalf of the company in all litigation matters; however, the transfer of
the business including assets and liabilities to others shall be effected
only if all shareholders so concur.
Article 85
In case of more than one liquidator, one or more may be selected to represent
the company. If no one is so selected, each shall have the power to represent
the company toward a third person. The execution of liquidated affairs shall
be decided by a majority of liquidators.
Liquidators selected to represent the company shall, by mutatis mutandis application
of the provision of Article 83, paragraph 1, file a report to the court.
Article 86
Any restriction imposed upon the power of representation of a liquidator shall not
be asserted as a defense against a bona fide third person.
Article 87
The liquidators shall, forthwith upon assuming the office, examine the financial
condition of the company and prepare a balance and an inventory of property, and
shall deliver the same to all shareholders for their review.
Any person who impedes, refuses or evades the examination to be conducted under
the provisions of the preceding Paragraph shall be imposed with a fine in an amount
not less than NT$ 20,000 but not more than NT$ 100,000.
The liquidators shall complete the examination within a period of six months;
and if the examination can not be completed within the foregoing six month,
an application, with good cause shown therein, for extension of the deadline
date may be filed with the competent court by the liquidators.
The liquidators who failed to complete the examination within the time limit fixed
in the preceding Paragraph shall each be imposed with a fine in an amount not less
than NT$ 10,000 but not more than NT$ 50,000.
The liquidators shall, upon request made by any shareholder at any time or from time
to time, provide the current status of progress of the liquidation process.
The liquidators who failed to comply with the provision set out in the preceding
Paragraph shall be imposed with a fine in an amount not less than NT$ 10,000 but
not more than NT$ 50,000.
Article 88
The liquidators shall by public announcement, after having assumed office, call
the creditors to make statements of claims and send notice to known creditors.
Article 89
Where the aggregate of the assets of a company is insufficient to satisfy its
liabilities, the liquidators shall file an application for declaration of bankruptcy.
The functional duties of liquidators shall terminate upon transfer of the matters
transacted by them to the receiver in bankruptcy.
The liquidators who violated the provision set out in Paragraph One of this Article
by failing to apply for declaration of bankruptcy shall each be imposed with
a fine in an amount not less than NT$ 20,000 but not more than NT$ 100,000.
Article 90
The liquidators shall not allocate the assets of the company to the shareholders
until all liabilities of the company have been discharged.
The liquidators who allocate assets of the company in violation of the aforesaid
provision shall be severally subject to imprisonment for a period not exceeding
one year, detention or, singularly or in addition thereto, a fine not exceeding
NT$60,000.
Article 91
The distribution of residual assets, unless otherwise provided for in the
Articles of Incorporation, shall be based on the ratio of net contribution of
such shareholder after allocation of profit or loss.
Article 92
The liquidators shall, within fifteen days after winding up the company,
draw up a final statement to be submitted to shareholders for approval. The
shareholders shall be deemed to have given approval, if no objection is raised
within one month after having received the said statement; however, unlawful
conduct on the part of the liquidators shall be excepted.
Article 93
The liquidators shall, within fifteen days after completing of the liquidation
and presentation of a report to shareholders for approval, file a report with
the court.
Liquidators who violate the aforesaid time-limit for filing a report, shall
be severally subject to a fine of not less than NT$3,000, but not more than
NT$15,000.
Article 94
The account books, statements and documents relating to business and liquidation
affairs of the company shall be kept for a period of ten years from the date of
filing a report to the court after completion of liquidation, and the custodian
of the aforesaid materials shall be appointed by a majority of the shareholders.
Article 95
The liquidators shall perform their duties with care of a good administrator. In
case of any loss or damage to the company in consequence of their lack of care,
they shall be jointly liable to make good such loss or damage to the company;
and if due to any intentional act or gross negligence, they shall in addition
be jointly liable to make good such loss or damage to any third person.
Article 96
The joint and unlimited liability of the shareholders shall terminate five years
after filing articles of dissolution.
Article 97
The relation between liquidators and a company shall, unless otherwise provided
in this Act, be determined in accordance with the provision contained in the
Civil Code pertaining to mandate.
CHAPTER III Limited Company
Article 98
A limited company shall be organized by one or more shareholders.
The shareholders of a company shall, with an unanimous agreement, draw up
the Articles of Incorporation and shall affix their respective signatures or
personal seals thereon. The articles of incorporation shall be kept at the head
office of the company, and a duplicate thereof shall be held by each shareholder
of the company.
Article 99
The liability of shareholders to the company shall, unless otherwise provided
for in Paragraph Two, be limited to the extent of the capital contributed by
each of them.
If a shareholder abuses the company’s status as a legal entity and thus causes
the company to bear specific debts and to be apparently difficult for the company
to pay such debts, and if such abuse is of a severe nature, the shareholder
shall, if necessary, be liable for the debts.
Article 99-1
Equity capital to be contributed other than cash by shareholders may be in
the form of monetary credit extended to the company, or the property or technical
know-how required by the business of the company.
Article 100
The capital stock of a limited company shall be paid up in full by all its
shareholders, and shall not be paid in installments nor be raised from
external sources.
Article 101
The Articles of Incorporation of a limited company shall contain the following
particulars:
1. The name of the company;
2. The scope of business to be operated by the company;
3. The name, domicile or residence of each shareholder;
4. The aggregate of capital stock and the capital contribution made by each
shareholder;
5. The ration or standards for profit distribution and loss apportionment
among all shareholders;
6. The location of the head office and the branch office(s), if any;
7. The number of directors;
8. The causes of dissolution of the company, if any; and
9. The date of establishment of the articles of incorporation.
The director who is authorized to represent a limited company and failed to
make the articles of incorporation available at the head office of the company
shall be imposed with a fine in an amount of not less than NT$ 10,000 but not
more than NT$ 50,000. If the company still refuses to make available the
articles of incorporation as required, the amount of fine shall be increased
to an amount of not less than NT$ 20,000 but not more than NT$ 100,000
consecutively for each non-compliance.
Article 102
Each shareholder shall have one vote irrespective of the amount of his
contribution to capital; however, the Articles of Incorporation may prescribe
that votes shall be allocated to the shareholders in proportion to their
responsible contributions to capital.
In case the government or a juristic person becomes a shareholder, the
provisions in Article 181 shall mutatis mutandis apply.
Article 103
A limited company shall keep at its head office a shareholders roster,
which shall contain the following particulars:
1. The amount of capital contribution made by each shareholder, and the
serial number of the share certificate issued to him/her;
2. The name or title, domicile or residence of each shareholder; and
3. The date of payment of share equity by each shareholder.
The director who is authorized to represent the company and failed to
make the shareholders roster available at the company shall be imposed
with a fine not less than NT$ 10,000 but not more than NT$ 50,000. If the
company still refuses to make available the shareholder roster as required,
the amount of fine shall be increased to an amount of not less than NT$ 20,000
but not more than NT$ 100,000 consecutively for each non-compliance.
Article 104 (Deleted)
Article 105 (Deleted)
Article 106
Increase of the amount of capital stock of a limited company shall be approved
by a majority of voting shares of all shareholders. However, even if a shareholder
has agreed to the capital increase plan of the company, he/she has no obligation
to contribute for the increased portion of the capital stock proportionally to
the percentage of his/her original shareholding in effect prior to the capital
increase.
Under the circumstance set forth in the proviso of the preceding paragraph,
new shareholders may be allowed to join the company with an approval by a
majority of voting shares of all shareholders.
Subject to an approval by a majority of voting shares of all shareholders,
a limited company may effect a capital reduction project or change its organization
into a company limited by shares.
The shareholders of a limited company who disagree with the proposals set forth
in the preceding 3 paragraphs shall be deemed to be in agreement with the portion
of amendment made in the Articles of Incorporation in respect to such proposals.
Article 107
After the company has adopted a resolution for the change of organization, it
shall immediately notify each of its creditors and make a public announcement.
A company, after the change of organization, shall assume the debt owned by it
prior to its change of organization.
The provisions of Article 73 and Article 74 shall apply mutatis mutandis to
reduction of capital.
Article 108
A limited company shall have at least one but not more than three directors to
execute the business operation and to represent the company who shall be elected
from among the shareholders with disposing capacity and shall be approved by two
thirds or more of the voting shares of all shareholders. When there are several
directors,the Articles of Incorporation may stipulate to have one director to
act as the chairman of directors and to represent the company externally; the
directors shall elect a chairman of directors from among the directors by a
majority vote of all directors.
In case the or an executive director is on leave or unable to exercise his/her
functional duties for any reason, a shareholder shall be designated to act in
his/her behalf; and if no representative is so designated, the representative
shall be elected by the shareholders from among themselves.
Where a director intends to conduct, for the benefit of his/her own or others,
a business of the same kind as that of the company, he/she shall make an
explanation to all shareholders about the important contents of such act
and shall obtain a prior consent of two thirds or more of the voting shares
of all shareholders.
The provisions set out in Article 30, Article 46, Articles 49 through 53,
Paragraph Three of Article 54, Articles 57 through 59, Paragraph Three of
Article 208, Article 208-1, and Paragraph One and Two of Article 211 of this
Act shall apply mutatis mutandis to the directors of a limited company.
The director representing a limited company fails to comply with Paragraph One
and Two of Article 211 as applied mutatis mutandis in the preceding paragraph
shall be imposed with a fine in an amount of not less than NT$ 20,000 but not
more than NT$ 100,000.
Article 109
Shareholders who do not conduct business may, from time to time, exercise
power of audit, and the provisions in Article 48 shall mutatis mutandis apply
to such power of audit.
In performing their functional duties under the preceding Paragraph, shareholders
who do not conduct business may appoint, on behalf of the company, a practicing
lawyer and/or a certified public accountant to conduct the examination.
A limited company evades, impedes or refuses the examination to be conducted
by shareholders who do not conduct business, the director representing a limited
company shall be imposed with a fine of not less than NT$ 20,000 but not more
than NT$ 100,000.
Article 110
Upon close of each fiscal year, the directors shall prepare various reports
and financial statements in accordance with the provisions of Article 228 of
this Act and shall deliver the same to each of the shareholder for their approval;
such approval shall be approved by a majority of voting shares of all shareholders.
The annual reports and financial statements referred to in the preceding Paragraph
shall be duly delivered to shareholders within six months after close of each
fiscal year. If no objection is raised by any shareholder over a period of one
month after such delivery , they shall be deemed to have been approved by all
shareholders.
The provisions set out in Article 228-1, Articles 231 through 233, Article 235,
Article 235-1, Paragraph One of Article 240 and Paragraph One of Article 245 of
this Act shall apply mutatis mutandis to a limited company.
Any person who evades, impedes, or refuses the inspection to be conducted by
the inspector under Article 245 as applied mutatis mutandis in the preceding
paragraph shall be imposed with a fine of not less than NT$ 20,000 but not
more than NT$ 100,000.
Article 111
A shareholder shall not, without the consent of a majority of voting shares of
all other shareholders, transfer all or part of his contribution to the capital
of the company to another person or persons.
The directors shall not, without the consent of two thirds or more of the voting
shares of all other shareholders, transfer all or part of their contribution to
the capital of the company to another person or persons.
The shareholders who disagree with the transfer as mentioned in the preceding
two paragraphs, shall have priority to accept such transfer. If they do not accept
the transfer, it shall be deemed that their consent has been given for the transfer
and to amend the Articles of Incorporation in regard to matters relating to the
shareholders and the amount of their contribution to the capital of the company.
The court shall, in transferring a shareholder’s contribution to the capital of
a company to another person or persons through the proceedings of compulsory
execution, order the company and all other shareholders to designate, within
twenty days the transferee or transferees in accordance with the manner set forth
in Paragraph One or Paragraph Two. In case the transferee or transferees are not
designated within the prescribed time limit or the transferee or transferees
designated do not accept the terms and conditions set forth for the transfer,
it shall be deemed that consent has been given for the transfer and for the
modification or alteration of the Articles of Incorporation in regard to matters
relating to the shareholders and the amount of their contribution to the capital
of the company.
Article 112
A company shall, after its losses have been covered and all taxes and dues have
been paid and at the time of allocating surplus profits, first set aside ten
percent of such profits as a legal reserve. However when the legal reserve
amounts to the authorized capital, this shall not apply.
Aside from the aforesaid legal reserve, a company may, by the provisions of
its Articles of Incorporation or with the consent of two thirds or more of
the voting shares of all shareholders, appropriate another sum as a special
reserve.
Article 239 and Item Two, Paragraph One and Paragraph Three of Article 241
shall apply mutatis mutandis to a limited company.
Responsible persons of a limited company who fail to set aside a legal reserve
in violation of the provisions in Paragraph One, shall be imposed with a fine
of not less than NT$ 20,000 but not more than NT$ 100,000.
Article 113
A modification of Articles of Incorporation, consolidation or merger and
dissolution of a limited company shall be approved by two thirds or more of
voting shares of all shareholders.
Subject to the provision of the preceding paragraph, for modification of Articles
of Incorporation,
consolidation or merger, dissolution and liquidation of a limited company,
the relevant provisions of the unlimited company shall apply mutatis mutandis.
CHAPTER IV Unlimited Company with Limited Liability Shareholders
Article 114
An unlimited company with limited liability shareholders shall be organized by
shareholders of unlimited liability and shareholders limited liability.
Shareholders of unlimited liability shall bear joint unlimited liability for
obligations of the company, and shareholders of limited liability shall be
liable to the company only to the extent of the capital contributed by them.
Article 115
The provisions of Chapter II shall mutatis mutandis apply to an unlimited company
with limited liability shareholders unless otherwise provided for in this chapter.
Article 116
The Articles of Incorporation of an unlimited liability with limited liability
shareholders shall, in addition to particulars set forth in Article 41, state
the liability of each shareholder whether unlimited or limited.
Article 117
A shareholder of limited liability cannot contribute his capital in the form
of service.
Article 118
Any shareholder with limited liability may, upon close of each fiscal year, examine
the accounting books and records, the current condition of the business operations
and the property of a limited company; and when it is deemed necessary, the court may,
at the request of the shareholders with limited liability, allow them to examine
at any time the accounting books and records, and the conditions of the business
operations and the property of the company.
Any person who impedes, refuses or evades the examination set forth in the preceding
Paragraph shall be imposed with a fine in an amount not less than HT$ 20,000 but
not more than NT$ 100,000. For successive impeding, refusing or evading acts,
if any, the amount of fine shall be increased for each successive impeding,
refusing or evading act to not less than NT$ 40,000 but not more than NT$ 200,000.
Article 119
A shareholder of limited liability shall not, without the consent of a majority
of shareholders of unlimited liability, transfer all or part of his contribution
to the capital of the company to an other person or persons.
The provisions of Article 111, Paragraph 2 and 4, shall mutatis mutandis apply
to the transfer of contribution specified in the preceding paragraph.
Article 120
A shareholder of limited liability may engage in the same business as that of
the company either on his own account or on behalf of another and may also become
a shareholder of unlimited liability in another company or a partner in
partnership business.
Article 121
A shareholder of limited liability who leads others to believe that he is
a shareholder of unlimited liability, shall be liable to bona fide third person
as though he were a shareholder of unlimited liability.
Article 122
A shareholder of limited liability can neither conduct the business of the company
nor represent the company in its external affairs.
Article 123
A shareholder of limited liability may not withdraw his contribution to the capital
by reason of an adjudication of the commencement of guardianship or assistantship.
Upon the death of a shareholder of limited liability, his contribution to the capital
shall devolve upon his successors.
Article 124
A shareholder of limited liability may withdraw his shares due to some serious
cause for which he is not personally responsible with the consent of a majority
of the shareholders of unlimited liability, or he may apply to the court for
sanction to withdraw.
Article 125
A shareholder of limited liability may, with the unanimous agreement of all
shareholders of unlimited liability, be expelled under any of the following
circumstances:
1.Non-performance of his obligation to contribute his capital share; or
2.Improper conduct detrimental to the interest of the company.
The aforesaid expulsion shall not be valid in respect to such shareholder until
after due notice shall have been given to him.
Article 126
A company shall be dissolved upon the withdrawal of all shareholders of unlimited
liability or of limited liability; however, the remaining shareholders may, with
unanimous agreement, join with either shareholders of unlimited liability or
shareholders of limited liability to continue the business.
When all shareholders of limited liability withdraw as aforesaid, two or more
shareholders of unlimited liability may, with unanimous agreement, reincorporate
the company into an unlimited company.
When shareholders of unlimited liability and shareholders of limited liability
unanimously agree to reincorporate the company into an unlimited company, it shall
be done in accordance with the provisions of the preceding paragraph.
A company may reincorporate into a limited company or a company limited by
shares with the approval by two thirds or more of all shareholders to modify
its Articles of Incorporation.
Under the circumstance of the preceding paragraph, the dissenting shareholders
may withdraw his/her share capital by giving a written notice to the company.
Article 127
Liquidation shall be undertaken by all shareholders of unlimited liability,
provided that liquidators may be otherwise appointed by a resolution adopted
by a majority of the shareholders of unlimited liability; the same shall apply
to the discharge of such liquidators.
CHAPTER V Company Limited by Shares
Section 1.Incorporation
Article 128
A company limited by shares shall have two or more promoters.
Any person without disposing capacity, with limited disposing capacity or having
been adjudicated of the commencement of assistantship and such assistantship
having not been revoked yet is not qualified as a promoter.
Any government agency or any juristic person may become a promoter, provided,
however, that the juristic person eligible to act as a promoter shall be limited
to that conforming to any of the following requirements:
1. a company or a limited partnership;
2. a juristic person which contributes any proprietary technology or intellectual
property right created on its own through research and development as its
investment capital contribution; or
3. a juristic person which is operating a category of business that has been
recognized and approved to be in conformity with the objective of its incorporation
by the central authority in charge of the end enterprise involved.
Article 128-1
A company limited by shares which is organized by a single government shareholder or
a single juristic person shareholder shall be free from restrictive requirement set
out in Paragraph One of the preceding Article. The functional duties and power of the
shareholders’meeting of such company shall be exercised by its board of directors,
to which the provisions governing the shareholders’ meeting as set out in this Act
shall not apply.
The company referred to in the preceding paragraph may choose not to have the board
of directors but to have one or two directors; for a company with only one director,
such director shall be the chairman and the functional duties and powers of the board
of directors shall be exercised by such director, and the provisions governing the board
of directors as set out in this Act shall not apply to such company; for a company with
two directors, the provisions governing the board of directors as set out in this Act
shall apply mutatis mutandis.
The company referred to in Paragraph One may choose not to have supervisors; the
provisions governing supervisors as set out in this Act shall not apply to such company.
The directors and supervisors of the company referred to in Paragraph One shall be
appointed by such government shareholder or juristic person shareholder.
Article 129
The promoters of a company limited by shares shall draw up the Articles of Incorporation
containing the following particulars and shall affix thereon their respective signatures
or personal seals:
1. The name of the company;
2. The scope of business to be operated by the company;
3. For a company issuing par value shares, the total number of shares and the par value
of each share certificate; for a company issuing no par value shares, the total number
of shares.
4. The location of the company;
5. The number of directors and supervisors, and the term of their respective offices; and
6. The date of establishment of the Articles of Incorporation.
Article 130
The following matters shall not take effect, unless they are stipulated in the Articles
of Incorporation:
1. Establishment of branch office;
2. The cause(s) for dissolution of the company, if any;
3. The kind of special shares and the rights and obligations covered by such shares; and
4. Special benefits to be accorded to promoters, and the name of such beneficiaries.
The shareholders’ meeting may make change of the special benefits accordable to promoters
under the provision set out in Item Four of the preceding Paragraph provided that such
change shall not result in any prejudice to the benefits already accrued to the promoters.
Article 131
The promoters, after having subscribed in the first issue to the total number of shares,
shall make full payment for the numbers of shares respectively subscribed to, and elect
directors and supervisors.
The provisions of Article 198 shall apply mutatis mutandis to the aforesaid election.
Equity capital to be contributed other than cash by promoters may be in the form of
the property or technical know-how required by the business of the company.
Article 132
In case the promoters have not subscribed to the total number of shares in the first issue,
the remainder shares shall be subscribed to by solicitation.
When the aforesaid subscription to shares is to be solicited, special shares may be issued
in accordance with the provisions of Article 157.
Article 133
The promoters, when publicly soliciting subscriptions to shares, shall first have the
following documents and information prepared, and then file the same along with an
application to the authority in charge of securities exchange for examination and approval:
1.Business plan;
2.Full names and resumes of the promoters, and the number of shares subscribed, and
the kind of contribution;
3.Prospectus;
4.Names and locations of banks or post offices authorized to collect payment for
shares subscribed;
5.Names of underwriters or agents, if any, and the covenants between the promoters
and such underwriters or agents; and
6.Other matters as may be prescribed by the authority in charge of securities exchange.
The total number of shares subscribed by the aforesaid promoters shall not be less than
one-fourth of the total number of shares in the first issue.
Within thirty days after receiving a notice from the authority in charge of securities
exchange, all documents and information specified in various items of Paragraph 1 of
this Article shall be annotated with the reference number and date of the approval
letter and publicly announced provided, however, that the covenants referred to in
Item 5 of the Paragraph 1 may be exempt from public announcement.
Article 134
Banks or post offices authorized to collect payments for shares subscribed to shall have
the obligation to certify the amount of money received, and the amount so certified shall
be deemed as the capital money already received.
Article 135
Upon finding either of the following discrepancies in an application for public offering
of shares, the authority in charge of securities may disapprove the application or
may revoke its approval previously granted to the applicant:
1 Where any statement made in the application is found to be contrary to the applicable
laws and/or regulations or to be false; or
2.Where there is any change in the matters described in the application; and no correction
thereto has been made within a given time limit after having been required to do so.
Under the circumstance set forth in Item 2 of the preceding Paragraph, the authority
in charge of securities may impose on each of the promoters a fine in an amount not
less than NT$ 20,000 but not more than NT$ 100,000.
Article 136
In case of annulment of approval in accordance with the preceding article, the solicitation
shall be cancelled if not yet in progress; if solicitation is already in progress, persons
so drafted may demand a refund of the original issuing value of shares plus interests
thereon to be calculated at the legal rate.
Article 137
The prospectus shall state the following particulars:
1.Particulars set forth in Article 129 and Article 130;
2.Number of shares subscribed to by each of the promoters;
3.If share certificates are issued above par value, the issuing value;
4.The time-limit for full subscription by solicitation and the statement that if the
shares are not subscribed in full within such time-limit, the subscribers may rescind
their subscription; and
5.In case special shares are issued, the total amount of such shares and the matters
specified in various items of Paragraph One of Article 157.
Article 138
The promoters shall prepare a share subscription form indicating therein the matters
required in Paragraph One, Article 133 and the reference number and the date of the
approval letter given by the authority in charge of securities, and shall make such
form available to the subscribers for them to fill in the number and amount of the
shares to be subscribed and their respective domiciles or residences, and to affix
thereon their respective signatures or personal seals.
In case the share certificates are issued at a premium, the subscribers shall
indicate in the share subscription form the amount of share price they agree to pay.
In the event the promoters violate the provisions of Paragraph One of this Article
by failing to prepare and make available the share subscription forms, the authority
in charge of securities shall impose on them a fine in an amount not less than
NT$ 10,000 but not more than NT$ 50,000.
Article 139
Subscribers shall have the obligation to pay for the shares they have subscribed
to in the subscription form.
Article 140
For a company issuing par value shares, its issue price of share certificates shall
not be less than the par value thereof, unless otherwise provided for by the competent
authority in charge of securities affairs for public companies.
For a company issuing no par value shares, its issue price of share certificate
shall have no restrictions.
Article 141
When the total number of shares in the first issue has been subscribed to in full,
the promoters shall immediately press each of the subscribers for payment. Where
share certificates are issued above the par value thereof, the amount in excess of
such value shall be collected at the same time with the payment for shares.
Article 142
Where subscriber delays payment for shares as provided in the preceding article,
the promoters shall fix a period of not less than one month and call upon each
subscriber to pay up, declaring that in case of default of payment within the
stipulated period their right shall be forfeited.
After the promoters have made the aforesaid call, the subscribers who fail to
pay accordingly shall forfeit their rights and the shares subscribed to by them
shall be otherwise sold.
Under the aforesaid circumstances, compensation for loss or damage, if any, may
still be claimed against such defaulting subscribers.
Article 143
After the share price payable by all subscribers under the preceding Article has
been fully paid up, the inaugural meeting of the company shall be convened by the
promoters within two months.
Article 144
The provisions of Paragraphs One, Four, Five of Article 172, Article 174, Article 175,
Article 177, Article 178, Article 179, Article 181, Paragraphs One, Two, Four, Five
of Article 183 and Articles 189 to 191 shall apply mutatis mutandis to the procedure
and resolutions of the inaugural meeting; however, in the election of directors and
supervisors, the provisions of Article 198 shall apply mutatis mutandis.
The promoter who fails to comply with Paragraphs One, Five of Article 172 or
Paragraphs One, Four, Five of Article 183 as applied mutatis mutandis in the
preceding paragraph shall be imposed with a fine in an amount of not less
than NT$ 10,000 but not more than NT$ 50,000.
Article 145
At the inaugural meeting of the company, the following matters shall be reported
by the promoters:
1.The Articles of Incorporation;
2.The roster of shareholders;
3.The total number of shares issued;
4.The name of subscribers and the kinds, quantities, values or appraisal standards
of the property, technical know-how other than cash provided by subscribers as
their capital contributions, if any;
5.The incorporation costs to be borne by the company, and the remuneration payable
to promoters;
6.The total number of special shares, if any, to be issued; and
7.The roster of directors and supervisors of the company, which roster shall
indicate the domiciles or residences, the serial number of ID Cards or the
reference number of the status certificates issued
by the government of them.
Upon finding of any false statements in the report made under the preceding
Paragraph, the promoters shall each be imposed with a fine in an amount not
more than NT$ 60,000.
Article 146
At the inaugural meeting of a company, election of the directors and supervisors
shall be effected. The directors and supervisors elect shall, upon election,
immediately investigate the accuracy of the matters reported by promoters under
the preceding Article, and shall report to the inaugural meeting of the
investigation results.
Where any promoter is elected a director or a supervisor who has a personal
interests in the matters subject to investigation, then the inaugural meeting
shall elect another person as the substitute of said promoter to perform the
investigation.
If anything contained in the promoters report is found excessive or false in
the course of investigation conducted under the preceding two Paragraphs,
appropriate cut-off or reduction shall be made by the inaugural meeting;
If any promoter impedes the investigation, or if any director, supervisor or
investigator makes false report, he/she shall be imposed with a fine in an amount
not more than NT$ 60,000;
Upon request of the directors, supervisors or investigators for extension of the
deadline date for submission of the investigation report under either of the
provisions of the preceding two Paragraphs, the inaugural meeting may decide, by
applying the provisions of Article 182 of this Act mutatis mutandis, to postpone
or to reconvene the inaugural meeting.
Article 147
The inaugural meeting may curtail the remuneration given or special privileges
accorded to the promoters and expense incurred in the incorporation of the
company, if any is found excessive. If the payment on shares other than in
cash is overestimated in value, the inaugural meeting may reduce the number
of shares to be given or order the subscriber to make up for the deficiency.
Article 148
All shares in the first issue, which have not been subscribed to and those
which, though subscribed, have not been paid for, shall be subscribed and
paid for the promoters jointly and severally. The same shall apply to those
shares which have been subscribed but eventually rescinded.
Article 149
In the circumstances specified in Article 147 and Article 148, the company
may claim against the promoters for compensation for loss or damage, if any.
Article 150
In the event that a company not be formed, the promoter shall be jointly
and severally responsible for the consequence of their acts in forming the
company and all expenses incurred. The same shall apply to that portion of
the expenses which were curtailed on account of being excessive
Article 151
The inauguration meeting may amend the Articles of Incorporation or resolve
not to incorporate the company.
The provisions of Article 277, Paragraphs 2 through 4 shall apply, mutatis
mutandis, to the aforesaid amendment of Articles of Incorporation; and the
provisions of Article 316 shall apply, mutatis mutandis, to the aforesaid
resolution not to incorporate the company.
Article 152
Where three months have elapsed after the total number of shares in the
first issue has been contributed but the payment for which has not been fully
met, or, where the payment has been fully met but the promoters have not called
the inaugural meeting within two months, the subscribers may rescind their
subscription.
Article 153
After the conclusion of the inaugural meeting, no subscriber may rescind his subscription.
Article 154
The liability of shareholders to the company shall, unless otherwise provided in the
paragraph 2, be limited to payment in full of the shares they have subscribed.
If a shareholder abuses the company’s status as a legal entity and thus causes the
company to bear specific debts and to be apparently difficult for the company to pay
such debts, and if such abuse is of a severe nature, the shareholder shall, if necessary,
be liable for the debts.
Article 155
The promoters shall be jointly and severally liable to the company for compensation
for loss or damage in consequence of an neglect on their part in the performance of
their duties connected with the formation of the company.
The promoters shall, even after incorporation, be jointly and severally liable for
debts of the company incurred prior to incorporation.
Section 2.Shares
Article 156
The capital of a company limited by shares shall be divided into shares, and
a company shall choose either par value or no par value shares when issuing shares.
For a company issuing par value shares, each share shall have the same par value;
for a company issuing no par value shares, the payment for such no par value shares
shall be fully set aside as equity capital.
A portion of the shares may be designated as special shares, with the kind of
such special shares to be specified in the Articles of Incorporation.
The total number of shares as specified in the Articles of Incorporation may be issued
in installments; for shares to be issued at the same time and under the same conditions
of issuance, the issuance price thereof shall be the same. The method to determine
the issuance price for a public company may be prescribed by the competent authority
in charge of securities affairs.
Equity capital to be contributed other than cash by shareholders may be in the form
of monetary credit extended to the company, or the property or technical know-how
required by the company, provided, however, that the amount of such substitutive
capital contribution shall require a prior approval of the board of directors.
Article 156-1
A company may convert all of the issued par value shares into no par value shares
by a resolution adopted, at a shareholders’meeting, by a majority of the shareholders
present who represent two-thirds or more of the total number of its outstanding shares;
the capital reserve set aside based on Item One, Paragraph One of Article 241 before
such convert shall become equity capital in whole.
Where there is any higher percentage of the total number of shares represented by
the shareholders present and/or the total number of the voting rights required
in the Articles of Incorporation for the preceding paragraph, such higher
percentage shall prevail.
When a company issuing share certificates converts all of its par value shares
into no par value shares in accordance with Paragraph One, the share price of
issued par value shares shall be considered to be not written from the record
date of such convert.
Under the circumstance of preceding paragraph, the company shall give notice
to each shareholder to exchange his/her shares within 6 months from the record
date of such convert.
The preceding four paragraphs shall not apply to public companies.
A company choosing to issue no par value shares shall not convert its shares
into par value shares.
Article 156-2
A company may, in pursuance of the resolution adopted by its board of directors,
apply to the competent authority in charge of securities affairs for an approval
of public issuance of its shares. A company may apply for an approval of ceasing
its status as a public company by a resolution adopted, at a shareholders’meeting,
by a majority of the shareholders present who represent two-thirds or more of
the total number of its outstanding shares.
In the event the total number of shares represented by the shareholders present
at a shareholders’ meeting of a company whose shares have been issued in public
is less than the percentage of the total shareholdings required in the preceding
Paragraph, the resolution may be adopted by two-third of the voting rights exercised
by the shareholders present at the shareholders’meeting who represent a majority
of the outstanding shares of the company.
Where there is any higher percentage of the total number of shares represented
by the shareholders present and/or the total number of the voting rights required
in the Articles of Incorporation for the preceding two paragraphs, such higher
percentage shall prevail.
A public company has resolved, moved to an unknown place, or failed to perform
the duties as a public company under the Securities and Exchange Act for causes
not attributable to the company, the competent authority in charge of securities
affairs may cease its status as a public company.
In the case of a government owned company, the public issuance of its shares and
the cease of its status as a public company shall require a special prior approval
of the competent authority in charge of such enterprise.
Article 156-3
After its incorporation, the company may, pursuant to a resolution adopted by
a majority vote of a meeting of the board of directors attended by two-thirds
or more of all the directors, issue new shares as the consideration payable
by the company for its acquisition of the shares of another company, without
being subject to the restrictions set out respectively in Paragraphs One
through Three, Article 267 of this Act.
Article 156-4
After its incorporation, for improving its financial structure or resuming its normal
operation, the company participating in the special approval of the governmental bailout
program may issue and transfer new shares to the government as the consideration
for receiving governmental financial help. Such issuing procedure shall not be subject
to the restrictions regarding issuance of new shares set forth in this Act and the
regulations thereof shall be prescribed by the central competent authority.
In the case that the bailout program under the preceding paragraph reaches NTD 1 billion,
the competent authority of the special approval and the company receiving such bailout
shall report its self-help plan to the Legislative Yuan.
Article 157
Where a company is to issue special shares, it shall include in its Articles
of Incorporation provisions concerning:
1. Order, fixed amount or fixed ratio of allocation of dividends and bonus on special shares;
2. Order, fixed amount or fixed ratio of allocation of surplus assets of the company;
3. Order of or restriction on or no voting right on the exercise of voting power
by special shareholders;
4. Multiple voting right or veto power over specific matters on the exercise of voting power;
5. Any prohibition or restriction regarding special shareholders’ rights of being elected
as directors and/or supervisors or rights of electing a certain amount of seats of directors;
6. Number, method or formula for special shares to be converted into common shares;
7. Restrictions on transfer of special shares; and
8. Other matters concerning rights and obligations incidental to special shares.
Special shareholders with multiple voting right as referred to in Item Four of the
preceding paragraph shall have the same voting right as common shareholders for the
election of supervisors.
The following special shares shall not apply to a public company:
1. Special shares referred to in Item Four, Five and Seven of the preceding paragraph.
2. Special shares to be converted into multiple common shares.
Article 158
All special shares issued by a company shall be redeemable, provided that the privileges
accorded to special shareholders by the Articles of Incorporation shall not be impaired.
Article 159
In case a company has issued special shares, any modification or alteration in the Articles
of Incorporation prejudicial to the privileges of special shareholders shall be adopted in a
resolution by a majority of the shareholders present who represent two-thirds or more
of the total number of its outstanding shares and shall also be adopted by a meeting
of special shareholders.
For a company whose share certificates have been publicly issued, if the total number
of shares represented by shareholders attending a shareholders' meeting is not sufficient
to meet the criteria as specified in the preceding paragraph, the said resolution may be
adopted by a large majority representing two thirds of the votes at a shareholders'
meeting attended by shareholders representing a majority of the total number of issued
shares, and a favorable resolution to be adopted by a meeting of special shareholders
shall be also be required.
In case stricter criteria for the total number of shares represented by the attending
shareholders and the number of votes at the shareholders' meetings referred to in the
preceding two paragraph are specified in the Articles of Incorporation of a company,
such stricter criteria shall govern.
The provisions governing shareholders' meetings shall apply.
Article 160
Where there are several persons owning the same share or shares, such co-owners shall select
one of them for the exercise of their shareholders rights.
The co-owners of a share shall be jointly and severally liable to the company to pay for
the share so owned.
Article 161
A company shall not issue share certificates, unless it has completed the procedure
for incorporation registration or for company alteration registration as required
for issuance of new shares. However, this clause shall not apply to the companies
whose share certificates are to be issued under the provisions otherwise provided
for by the authority in charge of securities.
Share certificate issued in violation of the provisions set out in the preceding Paragraph
shall be null and void. However, holders of such share certificates may claim for
damages against the issuers of such share certificates.
Article 161-1
A public company shall, within three months after having completed the procedures
for company incorporation registration or for company alteration registration as
required for issuance of new shares, issue its capital shares.
The responsible persons of a company who violate the provisions set out in the
preceding paragraph for failing to issue share certificates shall be ordered by
the competent authority in charge of securities affairs to effect the issuance of
share certificate within a given time limit, and each of them shall further be subject
to a fine in an amount of not less than NT$ 240,000 but not more than NT$ 2,400,000;
and upon failure to comply with the said order, they shall be ordered again to issue
the share certificates within another given time limit and may be enforced successively
each time against any further violation thereafter until the time when the issuance
of share certificates is effected as required.
Article 161-2
For the shares to be issued by a company, the issuing company may be exempted from printing
any share certificate for the shares issued.
A company not printing its share certificate in accordance with the provision of the
preceding paragraph shall register the issued shares with a centralized securities
depositary enterprise and follow the regulations of that enterprise.
The transfer and creation of pledge for the shares registered with a centralized
securities depositary enterprise shall be handled by the company or by way of
book-entry transfer; Article 164 of this Act and Article 908 of the Civil Code
shall not apply.
The preceding paragraph shall not apply to shares printed but not returned to the company.
Article 162
A company issuing and printing shares shall assign its share certificates with serial
numbers, shall indicate the following particulars on such share certificates, and the
share certificates shall be affixed with the signatures or personal seals of the director
representing the company, and shall be duly certified or authenticated by the bank
which is competent to certify shares under the laws before issuance thereof:
1. The name of the company;
2. The date of incorporation registration, or the date of company alteration registration
for issuance of new shares;
3. For shares with par value, the total number of shares and share price; for shares with
no par value , the total number of shares.
4. The number of shares issued this time;
5. The words "share certificates of promoters" shall be marked on the share certificates
to be issued to promoters;
6. In the case of special share certificates, the words describing the class of such
special shares shall be marked thereon; and
7. The date of issue of the share certificate.
A registered share certificate shall bear the true name of the shareholder thereof. Where
a plural number of share certificates are held by a same person, his/her name shall be
indicated on all such share certificates. For share certificate(s) to be held by
a government agency or a corporate shareholder, the name of such government agency or
such corporate shareholder shall be indicated thereon, and no other shareholder’s name
nor only the name of the representative of such government shareholder or corporate
shareholder may be indicated thereof.
The rules governing certification or authentication of share certificates to be issued
under Paragraph One of this Article shall be prescribed by the central competent
authority. However, the provision set out in this Paragraph shall not apply to the
companies offering their respective share certificates to the public in accordance
with the rules otherwise prescribed by the competent authority in charge of securities
affairs.
Article 162-1
(Deleted)
Article 162-2
(Deleted)
Article 163
Unless as otherwise provided for in this Act, assignment/transfer of shares of a company
shall not be prohibited or restricted by any provision in the Articles of Incorporation
of the issuing company, but shall not be effected until the incorporation registration
of the company.
Article 164
Share certificate shall be assigned only by the holder thereof by way of endorsement,
and the name or title of the assignee shall be indicated on the share certificate.
Article 165
Assignment/transfer of shares shall not be set up as a defence against the issuing
company, unless name/title and residence/domicile of the assignee/transferee have been
recorded in the shareholders' roster.
The entries in the shareholders' roster referred to in the preceding Paragraph shall
not be altered within 30 days prior to the convening date of a regular shareholders'
meeting, or within 15 days prior to the convening date of a special shareholders' meeting,
or within 5 days prior to the target date fixed by the issuing company for distribution
of dividends, bonus or other benefits.
In the case of a company whose shares are issued to the public, the entries in its
shareholders' roster shall not be altered within 60 days prior to the convening date
of a regular shareholders' meeting, or within 30 days prior to the convening date of
a special shareholders' meeting.
The periods specified in the preceding two Paragraphs shall commence from the
applicable convening date of shareholders' meeting or from the applicable target
date, as the case may be.
Article 166
(Deleted)
Article 167
Subject to the provisions otherwise set out in Article 158, Article 167-1, Article 186,
Article 235-1 and Article 317 of this Act, a company may not, at its own discretion,
redeem or buy back any of its outstanding shares, nor may it accept any of its
outstanding shares as a security in pledge, unless a shareholder is in liquidation
or adjudged bankrupt, in which case, the shares being held by the said shareholder
may be bought back by the issuing company at the market price, with the buy-back
price payable to the said shareholder to be withheld for off-setting the debt owed
to the company by said shareholder prior to the process of the foregoing liquidation
or bankruptcy pronouncement.
The shares redeemed or bought back by the issuing company in accordance with
the proviso of the preceding Paragraph or the provisions of Article 186 hereof
shall be sold at the then current market price within six months. If the shares
so redeemed or bought back remain unsold after expiry of the foregoing time limit,
such shares shall be deemed as the shares which have never been issued by the
company; and under such circumstance, the company shall apply for an alteration
of the entries of the then existing corporate registration in respect of such shares
accordingly.
Where a majority of the total number of outstanding voting shares or of the total
amount of the capital stock of a subordinate company are held by its holding company,
the shares of the holding company shall not be purchased nor be accepted as a security
in pledge by the said subordinate company.
Where the holding company and its subordinate company as referred to in the
preceding Paragraph jointly hold or possess a majority of the total number of
outstanding shares or of the total amount of the capital stock of another company,
the shares of the said holding company and its subordinate company shall also not be
purchased nor be accepted as a security in pledge by the said another company.
Where the responsible person of a company has acted contrary to any provisions set out
in the preceding four Paragraphs by redeeming or buy back its outstanding shares,
or accepting such shares as the security in pledge, or raising the share price
for offsetting its outstanding debt, or reducing the selling price
of such shares, he/she shall be liable for the damage to the company.
Article 167-1
Unless as otherwise provided for in the law, a company may, upon adoption of
a resolution by a majority voting of the directors present at a meeting of
its board of directors attended by two-thirds of the directors of the company,
buy back its shares in a number not exceeding 5% of the total number of
its outstanding shares provided, however, that the total amount of the price
for buying back such shares shall not exceed the sum of the amount of
its reserved surplus earnings plus the amount of the realized capital reserve.
The shares bought back by the issuing company under the preceding Paragraph
shall be assigned or transferred to its employees within three years. If such
shares have not been transferred as required after expiry of the foregoing time
limit, such shares shall be deemed as the shares which have never been issued;
and under this circumstance, the company shall apply for a necessary alteration
registration in respect of such shares accordingly.
The issuing company of the shares bought back under Paragraph I of this Article
shall not be entitled to exercise the rights of a shareholder in respect of such
shares.
Qualification requirements of employees, including the employees of parents or
subsidiaries of the company meeting certain specific requirements, entitled to
receive shares in accordance with the provision of Paragraph Two, may be specified
in the Articles of Incorporation.
Article 167-2
Unless as otherwise provided for in the law or in the Articles of Incorporation,
a company may, upon adoption of a resolution by a majority of the directors present
at a meeting of the board of directors attended by two-thirds of more of the total
number of directors of the company, enter into a share subscription right agreement
with its employees whereby the employees may subscribe, within a specific period of
time, a specific number of shares of the company. Upon execution of the said agreement,
the company shall issue to each employee a share subscription warrant.
The share subscription warrant obtained by any employee of the issuing company shall
be non-assignment, except to the heir(s) of the said employee.
Qualification requirements of employees, including the employees of parents or
subsidiaries of the company meeting certain specific requirements, entitled to
receive share subscription warrant in accordance with the provision of Paragraph One,
may be specified in the Articles of Incorporation.
Article 167-3
A company which buys back its shares and assigns or transfers those shares to its
employees in accordance with Article 167-1 or other laws may restrain such shares
from being assigned or transferred to others within a specific period of time which
shall in no case be longer than two years.
Article 168
A company shall not cancel its shares, unless a resolution on capital reduction has
been adopted by its shareholders' meeting; and capital reduction shall be effected
based on the percentage of shareholding of the shareholders pro rata, unless otherwise
provided for in this Act or any other governing laws.
A company reducing its capital may return share prices (or the capital stock) to
shareholders by properties other than cash; the returned property and the amount
of such substitutive capital contribution shall require a prior approval of the
shareholders’ meeting and obtain consents from the shareholders who receive such property.
The board of directors shall first have the value of such property and the amount
of such substitutive capital contribution set forth in the preceding Paragraph
audited and certified by a certified public accountant before the shareholders’meeting.
Where a company cancels its shares in a manner in violation to the provisions set out
in Paragraphs One to Three of this Article, the responsible person(s) of the company
shall (each) be imposed with a fine in an amount not less than NT$ 20,000 but
not more than NT$ 100,000.
Article 168-1
Where a company has a need to reduce and to increase it capital stock before the end of
any fiscal year in order to offset its loss, the board of directors shall, at least 30
days prior to the convening date of the shareholders' meeting, forward the financial
statements and a loss offsetting proposal to the supervisors for their auditing before
submitting the audited version thereof to the shareholders' meeting for review and approval
by a resolution.
In case the audited financial statements and the loss offsetting proposal are submitted
to a special shareholders' meeting under the provisions of the preceding Paragraph,
the provisions of Articles 229 through 231 of this Act shall apply mutatis mutandis.
Article 169
The shareholders’ roster of a company shall be assigned with serial numbers and shall
contain the following particulars:
1.The name or title and the domicile or residence of the shareholders;
2.The number of shares held by each shareholder; and the serial number(s) of share
certificate(s), if issued, by that shareholder;
3.The date of issuance of the share certificates; and
4.The words describing the type of special shares, if special shares are issued.
Where computerized operation or machine processing operation is used in the company,
then the information as required in the preceding Paragraph may be annexed to
the shareholders’ roster with relevant supplemental tables.
Section 3.Shareholders' Meeting
Article 170
Shareholders' meeting shall be of the following two kinds:
1.Regular meeting of shareholders: to be held at least once every year.
2.Special meeting of shareholders: to be held when necessary.
The regular meeting of shareholders referred to in the preceding Paragraph shall be
convened within six months after close of each fiscal year, unless otherwise approved
by the competent authority for good cause shown.
The director who is authorized to represent the company and fails to call a regular
shareholders' meeting within the time limit specified in the preceding Paragraph
shall be imposed with a fine in an amount not less than NT$ 10,000 but not more
than NT$ 50,000.
Article 171
A shareholders meeting shall, unless otherwise provided for in this Act, be convened
by the Board of Directors.
Article 172
A notice to convene a regular meeting of shareholders shall be given to each shareholder
no later than 20 days prior to the scheduled meeting date.
A notice to convene a special meeting of shareholders shall be given to each shareholder
no later than 10 days prior to the scheduled meeting date.
For a public company, a notice to convene a regular meeting of shareholders shall be given
to each shareholder no later than 30 days prior to the scheduled meeting date. In case
a public company intends to convene a special meeting of shareholders, a meeting notice
shall be given to each shareholders no later than 15 days prior to the scheduled meeting date.
The cause(s) or subject(s) of a meeting of shareholders to be convened shall be indicated
in the individual notice to be given to shareholders; and the notice may, as an alternative,
be given by means of electronic transmission, after obtaining a prior consent from
the recipient(s) thereof.
Matters pertaining to election or discharge of directors and supervisors, alteration
of the Articles of Incorporation, reduction of capital, application for the approval
of ceasing its status as a public company, approval of competing with the company
by directors, surplus profit distributed in the form of new shares, reserve distributed
in the form of new shares, dissolution, merger, spin-off, or any matters as set forth
in Paragraph I, Article 185 hereof shall be itemized in the causes or subjects to
be described and the essential contents shall be explained in the notice to convene
a meeting of shareholders, and shall not be brought up as extemporary motions;
the essential contents may be posted on the website designated by the competent
authority in charge of securities affairs or the company, and such website shall
be indicated in the above notice.
The director representing the company who fails to comply with Paragraphs One,
to Three and the preceding paragraph shall be imposed with a fine in an amount
of not less than NT$ 10,000 but not more than NT$ 50,000; for a public company,
the director representing the company shall be imposed by the competent authority
in charge of securities affairs with a fine in the amount of not less
than NT$240, 000 but not more than NT$2,400,000.
Article 172-1
Shareholder(s) holding one percent (1%) or more of the total number of outstanding
shares of a company may propose to the company a proposal for discussion at
a regular shareholders’ meeting, provided that only one matter shall be allowed
in each single proposal, and in case a proposal contains more than one matter,
such proposal shall not be included in the agenda.
Prior to the date on which share transfer registration is suspended before the convention
of a regular shareholders’ meeting, the company shall give a public notice announcing
acceptance of proposal in writing or by way of electronic transmission, the place and
the period for shareholders to submit proposals to be discussed at the meeting; and the
period for accepting such proposals shall not be less than ten (10) days.
The number of words of a proposal to be submitted by a shareholder shall be limited
to not more than three hundred (300) words, and any proposal containing more
than 300 words shall not be included in the agenda of the shareholders’
meeting. The shareholder who has submitted a proposal shall attend, in person
or by a proxy, the regular shareholders’ meeting whereat his proposal is to be
discussed and shall take part in the discussion of such proposal.
Unless any of the following circumstances is satisfied, the board of directors of
the company shall include the proposal submitted by a shareholder in the list of
proposals to be discussed at a regular meeting of shareholders:
1. Where the subject (the issue) of the said proposal cannot be settled or resolved by
a resolution to be adopted at a meeting of shareholders;
2. Where the number of shares of the company in the possession of the shareholder making
the said proposal is less than one percent (1%) of the total number of outstanding shares
at the time when the share transfer registration is suspended by the company in accordance
with the provisions set out in Paragraph II or Paragraph III, Article 165 of this Act;
3. Where the said proposal is submitted on a day beyond the deadline fixed and announced
by the company for accepting shareholders’ proposals; and
4. Where the said proposal containing more than 300 words or more than one matters
in a single proposal as provided in the proviso of Paragraph One.
A shareholder proposal proposed under Paragraph One for urging a company to promote public
interests or fulfill its social responsibilities may still be included in the list of
proposals to be discussed at a regular meeting of shareholders by the board of directors.
The company shall, prior to preparing and delivering the shareholders’meeting notice,
inform, by a notice, all the proposal submitting shareholders of the proposal screening
results, and shall list in the shareholders’ meeting notice the proposals conforming
to the requirements set out in this Article. With regard to the proposals submitted
by shareholders but not included in the agenda of the meeting, the cause of exclusion
of such proposals and explanation shall be made by the board of directors at the
shareholders’meeting to be convened.
The responsible person of a company who violates the provisions set out in Paragraph
Two, Four or the preceding Paragraph shall be imposed with a fine in an amount not
less than NT$10,000 but not more than NT$50,000; for a public company, the responsible
person of a company shall be imposed by the competent authority in charge of securities
affairs with a fine in the amount of not less than NT$240, 000 but not more than
NT$2,400,000.
Article 172-2
A company may explicitly provide for in its Articles of Incorporation that its
shareholders’meeting can be held by means of visual communication network or other
methods promulgated by the central competent authority.
In case a shareholders’ meeting is proceeded via visual communication network,
the shareholders taking part in such a visual communication meeting shall be
deemed to have attended the meeting in person.
The preceding two paragraphs shall not apply to a public company.
Article 173
Any or a plural number of shareholder(s) of a company who has (have) continuously
held 3% or more of the total number of outstanding shares for a period of one year
or a longer time may, by filing a written proposal setting forth therein the
subjects for discussion and the reasons, request the board of directors to call
a special meeting of shareholders.
If the board of directors fails to give a notice for convening a special meeting
of shareholders within 15 days after the filing of the request under the preceding
Paragraph, the proposing shareholder(s) may, after obtaining an approval from
the competent authority, convene a special meeting of shareholders on his/their own.
A special meeting of shareholders convened in accordance with the provisions set
out in the preceding two Paragraphs may appoint an inspector to examine the
business and financial condition of the company.
When the board of directors fails or can not convene a shareholders' meeting
on account of share transfer or any other causes, the shareholder(s) holding 3%
or more of the totle number of outstanding shares of the company may, after
obtaining an approval from the competent authority, convene a shareholders' meeting.
Article 173-1
Shareholders continuously holding 50% or more of the total number of outstanding
shares of a company for a period of three months or a longer time may convene
a special shareholders’meeting.
The calculation of the holding period and holding number of shares in the preceding
paragraph shall be based on the holding at the time of share transfer suspension
date in accordance with Paragraph Two or Three of Article 165.
Article 174
Resolutions at a shareholders' meeting shall, unless otherwise provided for in
this Act, be adopted by a majority vote of the shareholders present, who represent
more than one-half of the total number of voting shares.
Article 175
When the number of shareholders present does not constitute the quorum prescribed
in the preceding article, but those present represent one-third or more of the
total number of issued shares, a tentative resolution may be passed by a majority
of those present. A notice of such tentative resolution shall be given to each
of the shareholders, and reconvene a Shareholders’ meeting within one month.
In the aforesaid meeting of shareholders, if the tentative resolution is again
adopted by a majority of those present who represent one-third or more of the
total number of issued shares, such tentative resolution shall be deemed to
be a resolution under the preceding article.
Article 175-1
Shareholders of a company may reach a voting agreement in writing to jointly exercise
their voting rights or may form a voting trust where the voting trustee will exercise
the voting power based upon the terms and conditions stated in such a written voting
trust agreement.
A voting trust cannot be set up as a defense against the company unless the written
voting trust agreement referred to in the preceding Paragraph,the name or title, office,
residence or domicile of each shareholder, and the total number, kind and amount
of shares transferred to the voting trust have been delivered to the company for
registration 30 days prior to a shareholders’ meeting or 15 days prior to a special
shareholders' meeting.
The two preceding paragraphs shall not apply to a public company.
Article 176
(Deleted)
Article 177
A shareholder may appoint a proxy to attend a shareholders’ meeting in his/her/its
behalf by executing a power of attorney stating therein the scope of power authorized
to the proxy. However, a public company shall comply with the provisions otherwise
stipulated by the competent authority in charge of securities affairs.
Except for trust enterprises or stock agencies approved by the competent
authority, when a person who acts as the proxy for two or more shareholders,
the number of voting power represented by him/her shall not exceed 3% of
the total number of voting shares of the company, otherwise, the portion
of excessive voting power shall not be counted.
A shareholder may only execute one power of attorney and appoint one proxy
only, and shall serve such written proxy to the company no later than 5 days
prior to the meeting date of the shareholders’ meeting. In case two or more
written proxies are received from one shareholder, the first one received
by the company shall prevail; unless an explicit statement to revoke the
previous written proxy is made in the proxy which comes later.
After the service of the power of attorney of a proxy to the company,in case
the shareholder issuing the said proxy intends to attend the shareholders’
meeting in person or to exercise his/her/its voting power in writing or
by way of electronic transmission , a proxy rescission notice shall be filed
with the company two days prior to the date of the shareholders’meeting
as scheduled in the shareholders’ meeting notice so as to rescind the proxy
at issue, otherwise, the voting power exercised by the authorized proxy
at the meeting shall prevail.
Article 177-1
A company whose shareholders may exercise their voting power in writing or
by way of electronic transmission in a shareholders' meeting shall describe
in the shareholders’ meeting notice the method of exercising
their voting power. However, a public company satisfied with the conditions
in terms of company’s scale, shareholder number, shareholder structure and
other essential factors stipulated by the competent authority in charge of
securities affairs shall adopt the electronic transmission as one of
the methods for exercising the voting power.
A shareholder who exercises his/her/its voting power at a shareholders meeting in
writing or by way of electronic transmission as set forth in the preceding Paragraph
shall be deemed to have attended the said shareholders’ meeting in person, but
shall be deemed to have waived his/her/its voting power in respective of any
extemporary motion(s) and/or the amendment(s) to the contents of the original
proposal(s) at the said shareholders’ meeting.
Article 177-2
In case a shareholder elects to exercise his/her/its voting power in writing
or by way of electronic transmission, his/her/its declaration of intention
shall be served to the company two days prior to the scheduled meeting date
of the shareholders' meeting, whereas if two or more declarations of the same
intention are served to the company, the first declaration of such intention
received shall prevail; unless an explicit statement to revoke the previous
declaration is made in the declaration which comes later.
In case a shareholder who has exercised his/her/its voting power in writing or
by way of electronic transmission intends to attend the shareholders' meeting
in person, he/she/it shall, two days prior to the meeting date of the scheduled
shareholders' meeting and in the same manner previously used in exercising his/her/its
voting power, serve a separate declaration of intention to rescind his/her/its
previous declaration of intention made in exercising the voting power under the
preceding Paragraph Two. In the absence of a timely rescission of the previous
declaration of intention, the voting power exercised in writing or by way of
electronic transmission shall prevail.
In case a shareholder has exercised his/her/its voting power in writing or
by way of electronic transmission, and has also authorized a proxy to attend
the shareholders' meeting in his/her/its behalf, then the voting power exercised
by the authorized proxy for the said shareholder shall prevail.
Article 177-3
Where a company offering its shares to be public convenes a shareholders' meeting,
the company shall prepare a manual for shareholders' meeting proceedings and
shall disclose such manual together with other information related to
the said shareholders' meeting in a public notice to be published prior to
the scheduled meeting date of that shareholders' meeting.
Regulations governing the time and manner for publishing the public notice
as required in the preceding Paragraph, the particulars to be contained
in the manual for shareholders' meeting, and other governing rules shall be
prescribed by the government authority in charge of securities affairs.
Article 178
A shareholder who has a personal interest in the matter under discussion
at a meeting, which may impair the interest of the company,
shall not vote nor exercise the voting right on behalf of another shareholder.
Article 179
Except in the circumstances otherwise provided for in this Act, a shareholder
shall have one voting power in respect of each share in his/her/its possession.
The shares shall have no voting power under any of the following circumstances:
1.the share(s) of a company that are held by the issuing company itself in
accordance with the laws;
2. the shares of a holding company that are held by its subordinate company,
where the total number of voting shares or total shares equity held
by the holding company in such a subordinate company represents more than
one half of the total number of voting shares or the total shares equity of
such a subordinate company; or
3. the shares of a holding company and its subordinate company(ies) that
are held by another company, where the total number of the shares or
total shares equity of that company held by the holding company and
its subordinate company(ies) directly or indirectly represents more
than one half of the total number of voting shares or the total share equity
of such a company.
Article 180
The shares held by shareholders having no voting right shall not be counted
in the total number of issued shares while adopting a resolution
at a meeting of shareholders.
In passing a resolution at a shareholders' meeting, shares for which voting right
cannot be exercised as provided in Article 178 shall not be counted
in the number of votes of shareholders present at the meeting.
Article 181
When the government or a juristic person is a shareholder, its proxy shall not be limited
to one person, provided that the voting right that may be exercised shall be calculated
on the basis of the total number of voting shares it holds.
In case the aforesaid proxies are two persons or more, they shall exercise their voting
right jointly.
If a shareholder of a company whose shares have been issued in public holds shares
for others, such shareholder may exercise his/her/its voting power separately.
Regulations governing the qualifications, scope, methods of exercise, operating
procedures and other matters for compliance with respect to exercising voting power
separately in the preceding paragraph shall be prescribed by the competent authority
in charge of securities affairs.
Article 182
The provisions of Article 172 shall not apply where a meeting of shareholders resolves to
postpone the meeting for not more than, or to reconvene the meeting within, five days.
Article 182-1
For a shareholders' meeting convened by the board of directors, the chairman of the
meeting shall be appointed in accordance with the provisions of Paragraph Three,
Article 208 of this Act; where as for a shareholders' meeting convened by any other
person having the convening right, he/she shall act as the chairman of that meeting
provided, however, that if there are two or more persons having the convening right,
the chairman of the meeting shall be elected from
among themselves.
A company shall establish the rules governing the proceedings of meetings. During
the session of a shareholders' meeting, if the chairman declares the adjournment
of the meeting in a manner in violation of such rules governing the proceedings
of meetings, a new chairman of the meeting may be elected by a resolution to be
adopted by a majority of the voting rights represented by the shareholders attending
the said meeting to continue the proceedings of the meeting.
Article 183
Resolutions adopted at a shareholders' meeting shall be recorded in the minutes of
the meeting, which shall be affixed with the signature or seal of the chairman of
the meeting and shall be distributed to all shareholders of the company within
twenty (20) days after the close of the meeting.
The preparation and distribution of the minutes of shareholders' meeting as
required in the preceding Paragraph may be effected by means of electronic transmission.
With regard to a company offering its shares to the public, the distribution of
the minutes of shareholders' meeting as required in Paragraph One of this Article may
be effected by means of a public notice.
The minutes of shareholders' meeting shall record the date and place of the meeting,
the name of the chairman, the method of adopting resolutions, and a summary of the
essential points of the proceedings and the results of the meeting. The minutes
shall be kept persistently throughout the life of the company.
The attendance list bearing the signatures of shareholders present at the meeting
and the powers of attorney of the proxies shall be kept by the company for a minimum
period of at least one year. However, if a lawsuit has been instituted by any
shareholder in accordance with the provisions of Article 189 hereof, the minutes
of the shareholders' meeting involved shall be kept by the company until the
legal proceedings of the foregoing lawsuit have been concluded.
The director authorized to represent the company who violates the provisions
of Paragraph I, Paragraph IV or the preceding Paragraph of this Article shall
be imposed with a fine of not less than NT$ 10,000 but not more than NT$ 50,000.
Article 184
The shareholders' meeting may examine the statements and books prepared and
submitted by the board of directors and the auditing reports submitted by the
supervisors, and may decide, by resolution, the surplus earning distribution
and deficit off-setting plan.
In order to conduct the examination set forth in the preceding Paragraph, the
shareholders' meeting may select and appoint inspectors as required.
Any person who commits any act of impeding, refusing or evading the examination
set forth in the preceding two Paragraphs shall be imposed with a fine of not
less than NT$ 20,000 but not more than NT$ 100.000.
Article 185
A company shall not do any of the following acts without a resolution adopted
by a majority of the shareholders present who represent two-thirds or more of
the total number of its outstanding shares:
1. Enter into, amend, or terminate any contract for lease of the company’s
business in whole, or for entrusted business, or for regular joint operation
with others;
2. Transfer the whole or any essential part of its business or assets; or
3. Accept the transfer of another’s whole business or assets, which has great
bearing on the business operation of the company.
For a company which has had its share certificates publicly issued, if the total
number of shares represented by the shareholders present at shareholders’ meeting
is not sufficient to meet the criteria specified in the preceding paragraph, the
resolution to be made thereto may be adopted by two-thirds or more of the attending
shareholders who represent a majority of the total number of its outstanding shares.
Where stricter criteria for the total number of attending shareholders and for
the number of votes required to adopt a resolution at a shareholders’ meeting
referred to in the preceding two paragraphs are specified in the Articles of
Incorporation of the company, such stricter criteria shall govern.
A proposal for doing any of the acts specified in Paragraph One shall be submitted
by the Board of Directors by a resolution adopted by a majority vote at a meeting
of the Board of Directors attended by over two-thirds of the directors
Article 186
A shareholder, who has served a notice in writing to the company expressing his
intention to object to such an act prior to the adoption of a resolution at a
shareholders' meeting in accordance with the provisions of the preceding article,
and also has raised his objection at the shareholders' meeting, may request the
company to buy back all of his shares at the then prevailing fair price, provided,
however, that this shall not apply if, at the time of adopting a resolution under
Item 2, Paragraph 1 of the preceding article, the shareholders' meeting also
adopts a resolution for dissolution.
Article 187
The request mentioned in the preceding article shall be brought forth in writing
within twenty days after the adoption of resolution under Article 185, stating
therein the kinds and number of shares.
In case an agreement on the price of shares is reached between the shareholder
and the company, the company shall pay for the shares within ninety days from
the date on which the resolution was adopted. In case no agreement is reached
within sixty days of the date on which the resolution was adopted in accordance
with Article 185, the shareholder may, within thirty days from the date on which
the sixty-day period expired, apply to court for a ruling on the price.
The company shall pay legal interest on the price ruled by the court from the
date of expiration of the period referred to in Paragraph 2. The payment of
price shall be made at the same time against the delivery of share certificates,
and the transfer of such shares shall be effective at the time when payment is made.
Article 188
The request of a shareholder as provided in Article 186 shall lose its effect at
the time when the company calls off its act as specified in Article 185,
paragraph 1.
The same shall apply where a shareholder fails to make request within the period
prescribed in Paragraphs 1 and 2 of the preceding article.
Article 189
In case the procedure for convening a shareholders' meeting or the method of
adopting resolutions thereat is in contrary to any law, ordinance or the company's
Articles of Incorporation, a shareholder may, within 30 days from the date of
adoption of the said resolution, enter a petition in the court for annulment
of such resolution.
Article 189-1
Upon receipt of the petition for annulment of a resolution filed under the
preceding Article, if the court considers that the fact of violation described
in the said petition is insignificant and will do nothing to the prejudice of
the resolution, the court may dismiss such petition.
Article 190
In case a resolution already registered is annulled by an irrevocable judgment
of a court, the authority shall annul the registration upon notice by the court
or application of an interested party.
Article 191
In case the substance of a resolution adopted at a meeting of shareholders
is contrary to law or ordinance or the company's Articles of Incorporation,
the resolution shall be null and void.
Section 4.Directors and Board of Directors
Article 192
The board of directors of a company shall have at least three directors who shall
be elected by the shareholders’ meeting from among the persons with disposing capacity.
A company may choose not to have the board of directors but to have one or two
directors. For a company with only one director, such director shall be the chairman
and the functional duties and powers of the board of directors of such company
shall be exercised by such director, and the provisions governing the board of
directors as set out in this Act shall not apply to such company. The provisions
governing the board of directors as set out in this Act shall apply mutatis
mutandis to a company with two directors.
For a public company, if the percentage of shareholdings of all the directors
selected in accordance with Paragraph One is subject to the provisions separately
prescribed by the competent authority in charge of securities affairs, such
provisions shall prevail.
The provisions set out in Article 15-2 and Article 85 of The Civil Code shall
not apply to the disposing capacity set forth in Paragraph One of this Article.
Unless otherwise provided for in this Act, the relations between the company
and its directors shall be governed by the provisions of the Civil Code pertaining
to the mandate.
The provisions set out in Article 30 hereof shall apply mutatis mutandis to the
directors of a company.
Article 192-1
In case a candidates nomination system is adopted by a company for election of
the directors of the company, the adoption of such system shall be expressly
stipulated in the Articles of Incorporation of the company; and the shareholders
shall elect the directors from among the nominees listed in the roster of director
candidates. However, a public company satisfied with the conditions in terms of
company’s scale, shareholder number, shareholder structure and other essential
factors stipulated by the competent authority in charge of securities affairs
shall adopt such candidates nomination system and such adoption shall be expressly
stipulated in the Articles of Incorporation of the company.
The company shall, prior to the share transfer suspension date dedicated before
the meeting date of a shareholders’ meeting, announce in a public notice, the
period for accepting the nomination of director candidates, the quota of
directors to be elected, the place designated for accepting the roster of
director candidates nominated, and other necessary matters. The length of the
period for accepting the nomination of director candidates shall not be shorter
than ten (10) days.
Any shareholder holding 1% or more of the total number of outstanding shares
issued by the company may submit to the company in writing a roster of director
candidates, provided that the total number of director candidates so nominated
shall not exceed the quota of the directors to be elected. This restrictive
condition shall also be applicable to the roster of director candidates
nominated by the board of directors of the company.
The roster of director candidates submitted by a shareholder as prescribed in
the preceding Paragraph shall describe the name, education background and past
work experience of the director candidates.
The board of directors or other authorized conveners of shareholders’ meetings
shall examine and/or screen the data and information of each director candidate
nominated; and shall, unless under any of the following circumstances, include
all qualified director candidates in the final roster of director candidates
accordingly:
1.Where the roster of director candidates is submitted by the nominating shareholder
beyond the deadline fixed for accepting such candidates roster;
2.Where the number of shares of the company being held by the nominating shareholder
is less than 1% of the total number of outstanding shares of the company at the time
when the share transfer registration is suspended by the company in accordance with
the provisions set out in Paragraph II or Paragraph III, Article 165 of this Act;
3.Where the number of director candidates nominated exceeds the quota of the
directors to be elected; or
4.Where the roster of director candidates submitted by a shareholder fails to
describe the name, education background and past work experience of the director
candidates.
The company shall, no later than 25 days prior to the scheduled meeting date of
a regular shareholders’ meeting or no later than 15 days prior to the scheduled
meeting date of a special shareholders’ meeting, have the roster of director
candidates and their education background and past work experience published
in a public notice; for a public company, such a public notice shall be published
no later than 40 days prior to the scheduled meeting date of a regular shareholders’
meeting or no later than 25 days prior to the scheduled meeting date of a special
shareholders’ meeting.
The responsible person or other authorized conveners of a company who violates
the provisions set out in Paragraph Two or the preceding two Paragraphs of this
Article shall be imposed with a fine of not less than NT$10,000, but not more
than NT$50,000; for a public company, the responsible person or other authorized
conveners of a company shall be imposed with a fine by the competent authority in
charge of securities affairs of not less than NT$240,000 but not more than
NT$2,400,000.
Article 193
The Board of Directors, in conducting business, shall act in accordance with laws
and ordinances, the Articles of Incorporation, and the resolutions adopted at the
meetings of shareholders.
Where any resolution adopted by the Board of Directors contravenes the preceding
Paragraph, thereby causing loss or damage to the company, all directors taking
part in the adoption of such resolution shall be liable to compensate the company
for such loss or damage; however, those directors whose disagreement appears on
record or is expressed in writing shall be exempted from liability.
Article 193-1
A company may obtain directors liability insurance with respect to liabilities
resulting from exercising their duties during their terms of directorship.
A company shall report the insured amount, coverage, premium rate, and other
important contents of the directors liability insurance it has obtained or
renewed for directors, at the most recent board meeting.
Article 194
In case the board of directors decide, by resolution, to commit any act in violation
of any law, ordinance or the company's Articles of Incorporation, any shareholder who
has continuously held the shares of the company for a period of one year or longer may
request the board of directors to discontinue such act.
Article 195
The term of office of a director shall not exceed three years; but he/she may be
eligible for re-election.
In case no election of new directors is effected after expiration of the term of office
of existing directors, the term of office of out-going directors shall be extended
until the time new directors have been elected and assumed their office. However, the
competent authority may, ex officio, order the company to elect new directors within
a given time limit; and if no re-election is effected after expiry of the given time
limit, the out-going directors shall be discharged ipso facto from such expiration date.
Article 196
The remuneration of directors, if not prescribed in the Articles of Incorporation,
shall be determined by a meeting of shareholders and cannot be ratified by a meeting
of shareholders.
The provision set forth in Article 29, Paragraph 2 hereof shall apply mutatis mutandis
to the directors of a company.
Article 197
Each director shall, after having been elected, declare to the competent authority
the number and amount of the shares of the company being held by him/her at the time
when he/she is elected. In case a director of a company whose shares are issued to
the public that has transferred, during the term of office as a director, more than
one half of the company's shares being held by him/her at the time he/she is elected,
he/she shall, ipso facto, be discharged from the office of director.
If the number of company's shares held by a director is increased or reduced during
his/her term of office as a director, he/she shall declare such change to the
competent authority and shall place a public notice of such a fact.
If any director of a company whose shares are issued to the public, after having
been elected and before his/her inauguration of the office of director, has
transferred more than one half of the total number of shares of the company he/she
holds at the time of his/her election as such; or had transferred more than one
half of the total number of shares he/she held within the share transfer prohibition
period fixed prior to the convention of a shareholders' meeting, then his/her
election as a director shall become invalid.
Article 197-1
I. Upon creation or cancellation of a pledge on the company's shares held by a
director, a notice of such action shall be given to the company, and the company
shall, in turn and within 15 days after such pledge creation/ cancellation date,
have the change of pledge over such shares reported to the competent authority
and declared in a public notice; unless otherwise provided for in any rules or
regulations separately prescribed by the authority in charge of securities affairs.
II. In case a director of a company whose shares are issued to the public has
created a pledge on the company’s shares more than half of the company’s shares
being held by him/her/it at the time he/she/it is elected, the voting power of
the excessive portion of shares shall not be exercised and the excessive portion
of shares shall not be counted in the number of votes of shareholders present
at the meeting.
Article 198
In the process of electing directors at a shareholders' meeting, the number of
votes exercisable in respect of one share shall be the same as the number of
directors to be elected, and the total number of votes per share may be
consolidated for election of one candidate or may be split for election of
two or more candidates. A candidate to whom the ballots cast represent a
prevailing number of votes shall be deemed a director elect.
The provision of Article 178 hereof shall not apply to the voting power
referred to in the preceding Paragraph.
Article 199
A director may be discharged at any time by a resolution adopted at a shareholders'
meeting provided, however, that if a director is discharged during the term of
his/her office as a director without good cause shown, the said director may make
a claim against the company for any and all damages sustained by him/her as a
result of such discharge.
A resolution required for discharging a director under the preceding Paragraph
may be adopted only by a majority of the shareholders present who represent
two-thirds or more of the total number of its outstanding shares by the company.
For a company whose shares are issued to the public, if the total number of shares
represented by the shareholders present at a shareholders' meeting is less than the
quorum set forth in the preceding Paragraph, the resolution required for discharging
a director may be adopted by two-thirds (2/3) of the total votes of the shareholders
present at the shareholders' meeting attended by the shareholders representing
a majority of the total number of outstanding shares issued by the company.
Where higher requirements of the quorum of a shareholders' meeting and the number
of votes are specified in the Articles of Incorporation of a company, such higher
requirements shall prevail.
Article 199-1
Where all directors of a company are re-elected, prior to the expiration of the
term of office of existing directors, and in the absence of a resolution that
existing directors will not be discharged until the expiry of their present term
of office, all existing directors shall be deemed discharged in advance.
The aforesaid re-election shall be attended by shareholders who represent more
than one-half of the total number of issued and outstanding shares.
Article 200
In case a director has, in the course of performing his/her duties, committed any
act resulting in material damages to the company or in serious violation of applicable
laws and/or regulations, but not discharged by a resolution of the shareholders'
meeting, the shareholder(s) holding 3% or more of the total number of outstanding
shares of the company may, within 30 days after that shareholders' meeting,
institute a lawsuit in the court for a judgment in respect of such matter.
Article 201
When the number of vacancies in the board of directors of a company equals to
one third of the total number of directors, the board of directors shall call,
within 30 days, a special meeting of shareholders to elect succeeding directors
to fill the vacancies. However, in the case of a company whose shares are issued
to the public, the special meeting of shareholders for electing succeeding
directors shall be convened by the board of directors within 60 days.
Article 202
Business operations of a company shall be executed pursuant to the resolutions
to be adopted by the board of directors, except for the matters the execution
of which shall be effected pursuant the resolutions of the shareholders' meeting
as required by this Act or the Articles of Incorporation of the company.
Article 203
The first meeting of each term of the board of directors shall be convened by the
director who received a ballot representing the largest number of votes at the
election of directors within 15 days after the re-election. However, in case the
re-election of directors was conducted prior to the expiration of the term of
office of the directors of the preceding term, and a resolution was adopted not
to discharge the directors of the preceding term until the expiration of the term
of their offices as directors, the first meeting of the newly elected directors
shall be convened within 15 days after expiration of the term of office of the
directors of the preceding term.
Where directors are elected prior to the expiration of the term of office of
the directors of the preceding term, and a resolution is adopted not to discharge
the directors of the preceding term until the expiration of the term of office of
the preceding term, the chairman, the vice chairman and the managing directors of
the newly elected board of directors may be carried out prior to the expiration of
the term of office of the directors of the preceding term, free from the binding of
the provisions of the preceding Paragraph.
Where the number of directors attending the first meeting of the newly elected
board of directors is less than the minimum quorum of the meeting of the board
of directors convened for election of the chairman and the managing directors of
the board of directors, then the original convener shall resume the meeting
within 15 days to conduct the election, and may apply the resolution adopting
method set forth in Article 206 of this Act.
In case the director elect receiving the a ballot representing the largest number
of votes fails to convene the meeting of the board of directors within the time
limit set out in Paragraph One or the preceding Paragraph of this Article, then
the majority or more of the directors elect may convene the meeting on their own.
Article 203-1
Meetings of the board of directors shall be convened by the chairman of the
board of directors.
The majority or more of the directors may, by filing a written proposal setting
forth therein the subjects for discussions and the reasons, request the chairman
of the board of directors to convene a meeting of the board of directors.
If the chairman of the board of directors fails to convene a meeting of board
of directors within 15 days after the filing of the request under the preceding
paragraph, the proposing directors may convene a meeting of board of directors
on their own.
Article 204
In calling a meeting of the board of directors, a notice shall be given to each director
and supervisor no later than 3 days prior to the scheduled meeting date. However, where
there is any longer days required in the Articles of Incorporation, such longer days
shall prevail.
The time limit on giving a notice to the directors and supervisors for convening a
meeting of board of directors in a public company shall be prescribed by the competent
authority in charge of securities affairs and the preceding paragraph shall not apply
to a public company.
In the case of emergency, a meeting of the board of directors may be convened at
any time.
The notice set forth in the preceding three Paragraph may be effected by means of
electronic transmission, after obtaining a prior consent from the recipient(s) thereof.
In calling a meeting of the board of directors, a notice shall set forth therein
the subject(s) to be discussed at the meeting
Article 205
Each director shall attend the meeting of the board of directors in person, unless
as otherwise
provided for in the Articles of Incorporation that a director may be represented by
another director.
In case a meeting of the board of directors is proceeded via visual communication
network, then the directors taking part in such a visual communication meeting shall
be deemed to have attended the meeting in person.
In case a director appoints another director to attend a meeting of the board of
directors in his/her behalf, he/she shall, in each time, issue a written proxy and
state therein the scope of authority with reference to the subjects to be discussed
at the meeting.
A director may accept the appointment to act as the proxy referred to in the
preceding Paragraph of one other director only.
A company may explicitly provide for in its Articles of Incorporation that if it
is agreed by all directors, any action to be taken at a meeting of the board of
directors may be taken, without a meeting, by written consents to exercise their
voting power.
A meeting of the board of directors held in accordance with the preceding paragraph
shall be deemed to have been convened; the directors who exercise their voting power
by written consents shall be deemed to have attend the meeting in person.
The preceding two paragraphs shall not apply to a public company.
Article 206
Unless otherwise provided for in this Act, resolutions of the Board of Directors shall be
adopted by a majority of the directors at a meeting attended by a majority of the directors.
A director who has a personal interest in the matter under discussion at a board meeting
shall explain to the board meeting the essential contents of such personal interest.
Where the spouse, a blood relative within the second degree of kinship of a director, or
any company which has a controlling or subordinate relation with a director has interests
in the matters under discussion in the meeting of the preceding paragraph, such director
shall be deemed to have a personal interest in the matter.
The provisions of Article 178 and Article 180, paragraph 2 shall apply mutatis mutandis to
the resolutions set forth in Paragraph 1.
Article 207
Minutes shall be taken of the proceedings of the meeting of the board of directors.
The provisions of Article 183 shall apply mutatis mutandis to the aforesaid minutes.
Article 208
In case a company has no managing directors, the board of directors shall elect a chairman of
the board directors from among the directors by a majority vote at a meeting attended
by over two-thirds of the directors, and may also elect in the same manner a vice chairman of
the board in accordance with the provisions of the Articles of Incorporation.
In case a company has managing directors, the managing directors shall be elected from among
the directors in accordance with the manner set forth in the preceding Paragraph provided that
the number of managing directors shall not be less than three persons but not more than
one-third of the total number of directors. The chairman or the vice chairman of the
board shall be elected from the managing directors in accordance with the same manner set
forth in the preceding Paragraph.
The chairman of the board of directors shall internally preside the shareholders' meeting,
the meeting of the board of directors, and the meeting of the managing directors; and shall
externally represent the company. In case the chairman of the board of directors is on leave
or absent or can not exercise his power and authority for any cause, the vice chairman shall
act on his behalf. In case there is no vice chairman, or the vice chairman is also on leave
or absent or unable to exercise his power and authority for any cause, the chairman of the
board of directors shall designate one of the managing directors, or where there is no managing
directors, one of the directors to act on his behalf. In the absence of such a designation,
the managing directors or the directors shall elect from among themselves an acting chairman
of the board of directors.
During the recess of the board of directors, the managing directors shall regularly exercise
the power and authority of the board of directors in accordance with the provisions of laws
and regulations and the Articles of Incorporations of the company, and the resolutions adopted
by the shareholders' meetings and the meetings of the board of directors by conferences to
be called from time to time by the chairman of the board of directors; with the resolutions
to be adopted by a majority of managing directors present at such conferences attended by
a majority of managing directors.
The provisions set out in Article 57 and Article 58 hereof shall apply mutatis mutandis
to directors representing the company.
Article 208-1
In case the board of directors fails or is unable to exercise its power and authority
to the extent which is likely to cause damage to the company, the court may, at the
petition of interested party or parties or a public prosecutor, appoint one or more
temporary manager to exercise the power and authority of the chairman of the board
of directors and the board of directors instead provided, however, that he/she shall
not commit any act unfavorable to the company.
Upon appointment of the temporary manager under the preceding Paragraph, the court
shall request the competent authority to make appropriate registration of such appointment.
Upon discharge of the temporary manager appointed hereunder, the court shall request
the competent authority to cancel the registration of his appointment.
Article 209
A director who does anything for himself or on behalf of another person that is within
the scope of the company's business, shall explain to the meeting of shareholders the
essential contents of such an act and secure its approval.
The aforesaid approval shall be given upon a resolution adopted by a majority of the
shareholders present who represent two-thirds or more of the total number of its
outstanding shares.
For a company whose share certificates have been publicly issued, if the total number
of shares represented by shareholders present at a shareholders' meeting is not
sufficient to meet the criteria specified in the preceding paragraph, the resolution
may be adopted by a large majority of two thirds of the voting powers of the shareholders
present at a shareholders' meeting who present a majority of the total number of issued
shares.
Where stricter criteria for the total number of shares represented by the attending
shareholders and the required number of votes at the shareholders' meeting set forth
in the preceding two paragraphs are specified in the Articles of Incorporation,
such stricter criteria shall govern.
In case a director does anything for himself or on behalf of another person in violation
of the provisions of Paragraph 1, the meeting of shareholders may, by a resolution,
consider the earnings in such an act as earnings of the company unless one year has
lapsed since the realization of such earnings.
Article 210
Subject to the provisions otherwise provided for by the competent authority in charge
of securities affairs, the board of directors shall keep at the head office of the
company copies of the Articles of Incorporation, the minutes of every meeting of
the shareholders and the financial statements, and shall keep at the head office of
the company or the business office of its shareholder service agent the shareholders
roster and the counterfoil of corporate bonds issued by the company.
Any shareholder and any creditor of a company may request at any time, by submitting
evidentiary document(s) to show his/her interests involved and indicating the scope
of interested matters, an access to inspect, transcribe and to make copies of
the Articles of Incorporation and accounting books and records referred to in the
preceding paragraph; if the Articles of Incorporation and accounting books and records
are kept in a shareholder service agent, the company shall make such agent to provide
with the access.
The director representing a company who violates the provisions set out in Paragraph
One hereinabove by not making the Articles of Incorporation and accounting books and
records available shall be imposed with a fine of not less than NT$ 10,000 but not
more than NT$ 50,000; for a public company, the director representing a company shall
be imposed with a fine by the competent authority in charge of securities affairs of
not less than NT$240,000 but not more than NT$2,400,000.
The director representing a company who violates the provisions set out in Paragraph Two
by refusing the inspection, transcription or copying of relevant information or fails
to make the shareholder service agent to provide with the access without good cause
shown shall be imposed with a fine of not less than NT$ 10,000 but not more than NT$ 50,000;
for a public company, the director representing a company shall be imposed with a fine
by the competent authority in charge of securities affairs of not less than NT$240,000
but not more than NT$2,400,000.
Under the circumstances of the preceding two paragraphs, the competent authority or
the competent authority in charge of securities affairs shall notify the company to
rectify its law violating act within a given time limit; and if the company fails to
take corrective action beyond the given time limit, the competent authority or
the competent authority in charge of securities affairs shall continually notify
the company to rectify its law violating act within a given time limit and impose
the fine consecutively for each time of non-compliance until the law violating
act is rectified.
Article 210-1
The board of directors or other authorized conveners of shareholders’meetings may require
a company or its shareholder service agent to provide with the roster of shareholders.
The director representing a company who refuses to provide with the roster of shareholders
shall be imposed with a fine of not less than NT$ 10,000 but not more than NT$ 50,000;
for a public company, the director representing a company shall be imposed with a fine
by the competent authority in charge of securities affairs of not less than NT$240,000
but not more than NT$2,400,000.
A shareholder service agent who refuses to provide with the roster of shareholders
shall be imposed with a fine by the competent authority in charge of securities affairs
of not less than NT$240,000 but not more than NT$2,400,000.
Under the circumstances of the preceding two paragraphs, the competent authority or
the competent authority in charge of securities affairs shall notify the company to
rectify its law violating act within a given time limit; and if the company fails
to take corrective action beyond the given time limit, the competent authority or
the competent authority in charge of securities affairs shall continually notify
the company to rectify its law violating act within a given time limit and impose
the fine consecutively for each time of non-compliance until the law violating act
is rectified.
Article 211
In case the loss incurred by a company aggregates to one half of its paid-in
capital, the board of directors shall convene and make a report to the most recent
meeting of shareholders.
Subject to the provisions set out in Article 282 of this Act, in case the assets
of a company is insufficient to set off its liabilities, the board of directors
shall apply to the court for pronouncement of its bankruptcy.
The director(s) authorized to represent the company who has (have) violated the
provisions of the preceding two Paragraphs shall be imposed with a fine of not less
than NT$ 20,000 but not more than NT$ 100,000.
Article 212
In case the shareholders' meeting of a company resolves to institute an action
against a director, the company shall, within 30 days from the date of such
resolution, institute the action.
Article 213
In case of a lawsuit between the company and a director, the supervisor shall
act on behalf of the company, unless otherwise provided by law; and the meeting
of shareholders may also appoint some other person to act on behalf of the
company in a lawsuit.
Article 214
Shareholder(s) who has/have been continuously holding 1% or more of the total
number of the outstanding shares of the company over six months may request
in writing the supervisors of the company to institute, for the company,
an action against a director of the company.
In case the supervisors fails to institute an action within 30 days after
having received the request made under the preceding Paragraph, then the
shareholders filing such request under the preceding Paragraph may institute
the action for the company; and under such circumstance, the court may,
at the petition of the defendant, order the suing shareholders to furnish an
appropriate security. In case the suing shareholders become the loser in that
lawsuit and thus causing any damage to the company, the suing shareholders
shall be liable for indemnifying the company for such damage.
The shareholder(s) who initiate(s) the action in accordance with the
preceding paragraph may temporarily be exempted from paying the portion of
the court costs in excess of NT$600,000 if the amount of court costs collected
is more than NT$ 600,000.
In the action initiated in accordance with the provision of Paragraph Two,
the court may, on motion, appoint an attorney as an advocate for the plaintiff.
Article 215
Where a lawsuit instituted under paragraph 2 of the preceding article is found
by a final judgment to be based on facts apparently untrue, the shareholders
who instituted the action shall be liable to compensate the defendant director
for loss or damage resulting from such an action.
Where a lawsuit instituted under paragraph 2 of the preceding article is found
by a final judgment to be based on facts apparently true, the defendant director
shall be liable to compensate the shareholders who instituted the action for loss
or damage resulting from such an action.
Section 5.Supervisors
Article 216
Supervisors of a company shall be elected by the meeting of shareholders,
among them at least one supervisor shall have a domicile within the territory
of the Republic of China.
For a company whose shares are issued to the public, there must be two or more
supervisors to be elected in accordance with the provision of the preceding
Paragraph, and the total shareholdings of all supervisors shall meet the
requirement as separately specified by the competent authority in charge of
securities affairs, if any.
The relation between the company and its supervisors shall be subject to the
provisions governing the mandate as stipulated in the Civil Code.
The provisions set out in Article 30 and Paragraph One and Paragraph Four
regarding the disposing capacity of Article 192 of this Act shall apply
mutatis mutandis to the supervisors.
Article 216-1
Where the candidates nomination system is adopted by a company in its Articles
of Incorporation for election of supervisors, the provisions set out
in Paragraphs One to Six of Article 192-1 of this Act shall apply mutatis mutandis.
The responsible person or other authorized conveners of a company who violates the
provisions set out in Paragraphs Two, Five or Six of Article 192-1 as apply mutatis
mutandis in the preceding paragraph shall be imposed with a fine of not less
than NT$10,000, but not more than NT$50,000; for a public company, the responsible
person or other authorized conveners of a company shall be imposed with a fine by
the competent authority in charge of securities affairs of not less than NT$240,000
but not more than NT$2,400,000.
Article 217
The term of office of a supervisor shall not exceed three years, but he may be
eligible for re-election.
In case election of new supervisors can not be effected in time after expiration
of the term of office of existing supervisors, the existing supervisor shall
continue to perform their duties until the new supervisors elect has assumed
their office as supervisors. However, the competent authority may order, ex officio,
the company to conduct the re-election of supervisors within a given time limit. If
election of new supervisors is still not effected, the existing supervisors shall
be discharged, ipso facto, upon expiry of the time limit hereinabove fixed by the
competent authority.
Article 217-1
In case all supervisors of a company are discharged, the board of directors shall,within
30 days, convene a special meeting of shareholders to elect new supervisors. However,
for a company whose shares are issued to the public, the special meeting of shareholders
for election of supervisors shall be convened by the board of directors within 60 day.
Article 218
Supervisors shall supervise the execution of business operations of the company,
and may at any time or from time to time investigate the business and financial
conditions of the company, inspect, transcribe or make copies of the accounting
books and documents, and request the board of directors or managerial personnel
to make reports thereon.
In performing their functional duties under the preceding Paragraph, the supervisors
may appoint, on behalf of the company, a practicing lawyer and a certified public
accountant to conduct the examination.
The director representing a company who violates Paragraph One by evading, impeding,
or refusing the examination to be conducted by supervisors shall be imposed with a
fine of not less than NT$ 20,000 but not more than NT$ 100,000; for a public company,
the director representing a company shall be imposed with a fine by the competent
authority in charge of securities affairs of not less than NT$240,000 but not more
than NT$2,400,000.
Under the circumstances of the preceding paragraph, the competent authority or the
competent authority in charge of securities affairs shall notify the company to
rectify its law violating act within a given time limit; and if the company fails to
take corrective action beyond the given time limit, the competent authority or the
competent authority in charge of securities affairs shall continually notify the
company to rectify its law violating act within a given time limit and impose the
fine consecutively for each time of non-compliance until the law violating act
is rectified.
Article 218-1
When a director discovers the possibility that the company will suffer substantial
damage, he shall report to the supervisor immediately.
Article 218-2
Supervisors of a company may attend the meeting of the board of directors to
their opinions.
In case the board of directors or any director commits any act, in carrying out
the business operations of the company, in a manner in violation of the laws,
regulations, the Articles of Incorporation or the resolutions of the shareholders'
meeting, the supervisors shall forthwith advise, by a notice, to the board of
directors or the director, as the case may be, to cease such act.
Article 219
Supervisors shall audit the various statements and records prepared for
submission to the shareholders' meeting by the board of directors, and shall
make a report of their findings and opinions at the meeting of shareholders.
In performing their functional duties under the preceding Paragraph, the
supervisors may appoint a certified public accountant to conduct the auditing
in their behalf.
Supervisors who violated the preceding Paragraph by making false report shall
each be imposed with a fine in an amount not more than NT$ 60,000.
Article 220
In addition to the condition that the board of directors does not or is unable
to convene a meeting of shareholders, the supervisors may, for the benefit of
the company, call a meeting of shareholders when it is deemed necessary.
Article 221
Supervisor may each exercise the supervision power individually.
Article 222
A supervisor shall not be concurrently a director, a managerial officer or
other staff/employee of the company.
Article 223
In case a director of a company transacts a sales with, or borrows money from
or conducts any legal act with the company on his own account or for any other
person, the supervisor shall act as the representative of the company.
Article 224
In case a supervisor has, in performing his functional duties, violated the
provisions of any law, regulations, or the Articles of Incorporation of the
company, or was negligent of his duties and thus causing any damage to the
company, he shall be liable for indemnifying the company for such damage.
Article 225
When a meeting of shareholders resolves to institute an action against a
supervisor, the company shall institute such action within 30 days from the
date of adoption of such resolution.
The person who represents the company in the action instituted under the
preceding Paragraph may be appointed by the shareholders' meeting from the
persons other than the directors of the company.
Article 226
In case supervisor is liable to compensate the company or a third party and
a director is also liable, such supervisor and director shall be joint debtors.
Article 227
The provisions set out in Article 196 to 200, Article 208-1, Article 214 and
Article 215 hereof shall apply mutatis mutandis, to the supervisors provided,
however, that the request to be submitted to supervisors under Article 214
hereof shall be submitted to the board of director.
Section 6.Accounting
Article 228
At the close of each fiscal year, the board of directors shall prepare the
following statements and records and shall forward the same to supervisors
for their auditing not later than the 30th day prior to the meeting date of
a general meeting of shareholders:
1.the business report;
2.the financial statements; and
3.the surplus earning distribution or loss off-setting proposals.
The financial statements and records as required in the preceding Paragraph
shall be prepared in accordance with the rules prescribed by the central competent
authority.
Supervisors may request the board of directors to provide in advance the financial
statements and records for auditing as required in Paragraph I hereinabove.
Article 228-1
A company may explicitly provide for in its Articles of Incorporation that the
surplus earning distribution or loss off-setting proposal may be proposed at
the close of each quarter or each half fiscal year.
The proposal of surplus earning distribution or loss off-setting for the first
three quarters or half fiscal year, together with the business report and
financial statements, shall be forwarded to supervisors for their auditing,
and afterwards be submitted to the board of directors for approval.
A company distributing surplus earning in accordance with the provision of
the preceding paragraph shall estimate and reserve the taxes and dues to be
paid, the losses to be covered and the legal reserve to be set aside. Where
such legal reserve amounts to the total paid-in capital, this provision shall
not apply.
A company distributing surplus earning in the form of new shares to be issued
by the company in accordance with the provision of Paragraph Two shall follow
the provisions of Article 240; if such surplus earning is distributed in the
form of cash, it shall be approved by a meeting of the board of directors.
Surplus earning distribution or loss off-setting proposal by a public
company in accordance with the provisions of the preceding four paragraphs
shall be made based on the financial statements audited or reviewed by a
certified public accountant.
Article 229
The statements and records of accounts prepared by the Board of Directors
and the report made by the supervisors shall be made available at the head
office for inspection at any time by the shareholders, ten days prior to
the regular meeting of shareholders. The shareholders may bring their
lawyers or certified public accountants for such an inspection.
Article 230
The board of directors shall submit the various financial statements and
records prepared by it to the general meeting of shareholders for its
ratification; and after the ratification thereof by the general meeting
of shareholders, shall distribute to each shareholder the copies of ratified
financial statements and the resolutions on the surplus earning distribution
and/or loss offsetting.
For a company offering its shares to the public, the distribution of the
ratified financial statements and the resolutions on the surplus earning
distribution and/or the loss offsetting set forth in the preceding Paragraph
may be effected by way of a public notice.
Any creditor of the company may request the company to provide him with the
financial statements and records and the resolutions set forth in Paragraph
One hereinabove or to allow him to transcribe or make copies thereof.
The director authorized to represent the company who has violated the
provisions of Paragraph I of this Article by failing to distribute
the financial statement and records and the resolutions shall be imposed
with a fine of not less than NT$ 10,000 but not more than NT$ 50,000.
Article 231
Only after all the statements and records of accounts have been approved by
the meeting of shareholders shall directors and supervisors be deemed to have
been discharged from their liabilities, except in the event of any unlawful
conduct on the part of directors or supervisors.
Article 232
A company shall not pay dividends or bonuses, unless its losses shall have
been covered and a legal reserve shall have been set aside in accordance with
the provisions of this Act.
A company shall not pay dividends or bonuses, if there is no surplus earnings.
The responsible person(s) of a company who violates the provisions of the
preceding two Paragraphs by making distribution of dividends and bonuses
shall (each) be punished with imprisonment of not more than one year,
detention, and a fine in lieu thereof or in addition thereto in an amount
of not more than NT$ 60,000.
Article 233
If a company pays dividends and bonuses in violation of the provisions of the
preceding article, creditors of the company may request rescission and may also
claim for compensation for loss or damage resulted there-from.
Article 234
A company which according to he nature of its business requires more than two
years of preparation from the date of its incorporation before it can commence
business, may, with the approval of the competent authority, make distribution
of dividends in accordance with the provisions of its Articles of Incorporation.
The amount of the aforesaid dividends for distribution may be included as
pre-paid dividends under the account of shareholder's equity to be shown in
the balance sheet of the company. After commencing its business operation,
whenever the total amount of dividends and bonuses to be distributed each time
exceeds six per cent (6%) of its paid-in capital, then the amount of such
excessive distribution shall be offset against the aforesaid pre-paid dividends.
Article 235
Unless otherwise provided for in this Act, distribution of the dividends and
bonuses shall be effected in proportion to the number of shares held by each
shareholder accordingly.
Article 235-1
A fixed amount or ratio of profit of the current year distributable as employees’
compensation shall be definitely specified in the Articles of Incorporation. However,
the company’s accumulated losses shall have been covered.
The provisions set out in the preceding Paragraph shall not be applicable to
the government operated enterprises, except in the case where special approval
has been granted by the authority in charge of the government operated enterprise
concerned, and a fixed amount or ratio of profit distributable as employees’
compensation has been definitely specified in the Articles of Incorporation.
A company may, by a resolution adopted by a majority vote at a meeting of board
of directors attended by two-thirds of the total number of directors, have the
profit distributable as employees’ compensation in the preceding two paragraphs
distributed in the form of shares or in cash; and in addition thereto a report
of such distribution shall be submitted to the shareholders’ meeting.
A company which has the profit distributed to employees in the form of shares
by a resolution of the meeting of board of directors in accordance with the
provision of the preceding paragraph may resolve, at the same meeting of
the board of directors, to distribute the shares by way of new shares to be
issued by the company or existing shares to be re-purchased by the company.
Qualification requirements of employees, including the employees of parents
or subsidiaries of the company meeting certain specific requirements,
entitled to receive shares or cash in accordance with the provisions of
Paragraphs One to Three, may be specified in the Articles of Incorporation.
Article 236
(Deleted)
Article 237
A company, when allocating its surplus profits after having paid all taxes and
dues, shall first set aside ten percent of said profits as legal reserve. Where
such legal reserve amounts to the total paid-in capital, this provision shall
not apply.
Aside from the aforesaid legal reserve, the company may, under its Articles
of Incorporation or by resolution of the meeting of shareholders, set aside
another sum as special reserve.
Responsible persons of the company who fail to set aside legal reserve, in
violation of the provisions of Paragraph 1, shall be severally subject to a
fine of not less than NT$20,000 but not more than NT$100,000.
Article 238
(Deleted)
Article 239
The legal reserve and the capital reserve shall not be used except for making
good the deficit (or loss) of the company; however, this clause shall not
apply to the case set forth in Article 241 hereof or as otherwise provided
for in the law.
A company shall not use the capital reserve to make good its capital loss,
unless the surplus reserve is insufficient to make good such loss.
Article 240
A company may, by a resolution adopted by a majority of the shareholders
present who represent two-thirds or more of the total number of its outstanding
shares of the company, have the surplus profit distributable as dividends and
bonuses in whole or in part distributed in the form of new shares to be issued
by the company for such purpose. In case the amount of balance of such
distributable surplus profit is less the par value (or a fraction) of one
share, it shall be paid in cash.
For a company whose shares are issued to the public, if the total number of
shares represented by the shareholders present at a meeting of shareholders is
less than the threshold specified in the preceding Paragraph, the resolution
may be adopted by a large majority (2/3 or more) vote of the shareholders
present at that meeting of shareholders attended by the shareholders
representing a majority of the total number of the outstanding shares
of the company.
Where a higher threshold of the number of shareholders to be present and the
total number of shares represent is required by the Articles of Incorporation
of the company, such higher threshold shall prevail.
Except for a company whose shares are issued to the public and which is
subject to the provisions otherwise stipulated by the competent authority
in charge of securities affairs, the resolution to issue new shares under
this Article shall take effect upon close of the shareholders’ meeting
whereat the resolution is adopted, and the board of directors shall forthwith
notify each shareholder or cause the number of new shares distributable to
the shareholder to be recorded under the name of the pledgee(s) of the said
shareholder as registered in the shareholders roster.
A public company may explicitly stipulate in the Articles of Incorporation to
authorize the distributable dividends and bonuses in whole or in part may be
paid in cash after a resolution has been adopted by a majority vote at a
meeting of the board of directors attended by two-thirds of the total number
of directors; and in addition thereto a report of such distribution shall be
submitted to the shareholders’ meeting.
Article 241
Where a company incurs no loss, it may, pursuant to a resolution to be adopted
by a shareholders’ meeting as required in Paragraphs One to Three of the
preceding Article, distribute its legal reserve and the following capital reserve,
in whole or in part, by issuing new shares which shall be distributable as dividend
shares to its original shareholders in proportion to the number of shares being
held by each of them or by cash:
1.the income derived from the issuance of new shares at a premium;
2.the income from endowments received by the company.
The provisions set out in Paragraph Four and Paragraph Five of the preceding
Article shall be applicable mutatis mutandis to the capitalization of reserves
to be effected under the preceding Paragraph.
Where legal reserve is distributed by issuing new shares or by cash, only the
portion of legal reserve which exceeds 25 percent of the paid-in capital may
be distributed.
Article 242
(Deleted)
Article 243
(Deleted)
Article 244
(Deleted)
Article 245
Shareholders who have been continuously holding one per cent of total number of
the outstanding shares of a company for a period of six months or longer may
apply to the court, together with reasons and supporting evidence, and explain
the necessity for appointment of inspector to inspect, within the necessary scope,
the current status business operations, the financial accounts, the property,
particular items, document and record of a particular transaction of the company.
The court may, when it deems necessary based on the report made by the inspector,
order the supervisor(s) of the company to convene a meeting of shareholders.
Any person who evades, impedes, or refuses the inspection to be conducted by the
inspector, or the supervisor(s) who fails to convene a meeting of shareholders as
ordered by the court shall be imposed with a fine of not less than NT$ 20,000 but
not more than NT$ 100,000. If the inspection is still evaded, impeded, or refused
or the supervisor still fails to convene a meeting of shareholders as ordered by
the court, the above fine shall be imposed consecutively for each time of
non-compliance.
Section 7.Corporate Bonds
Article 246
A company may, by a resolution adopted by the Board of Directors, invite subscription
for corporate bonds, provided that the reasons for the said action as well as other
relevant matters shall be reported to the meeting of shareholders.
The aforesaid resolution shall be adopted by a majority of directors at a meeting
attended by two-thirds or more of the total number of directors.
Article 246-1
When a company issues corporate bonds, the company may covenant that the preferential
order of the corporate bonds to receive indemnification shall be lower than that of
other claims of the company.
Article 247
The total amount of corporate bonds of a public company shall not exceed the net
remainder of all assets in hands of the company after deducting all liabilities.
The total amount of unsecured corporate bonds shall not exceed one-half of the
aforesaid net remainder.
Article 248
When a company plans to issue corporate bonds, an application setting forth therein
the following particulars shall be filed with the competent authority in charge of
securities affairs:
1.The name of the company;
2.The total amount of corporate bonds to be issued and the value of each bond;
3.The interest rate payable on the corporate bonds;
4.The method and deadline date for redemption of the corporate bonds;
5.The plan for raising and the method for custody of the funds raised;
6.The purpose for which the funds raised by issuing corporate bonds are to be used,
and the plan for using such funds;
7.If corporate bonds have been issued in the past, the amount of such bonds remains
unredeemed;
8.The value or the minimum value at which corporate bonds are to be issued;
9.The total number of authorized shares of the company and the total number and the
amount of shares actually issued;
10.The amount of balance of all existing assets of the company after deducting all
liabilities and intangible assets;
11.The financial statements which should be prepared and submitted pursuant to the
requirements of the competent authority in charge of securities affairs;
12.The name or title of the trustees of all holders of the corporate bonds, and the
covenants made in the mandates except for the issuance of corporate bonds to specific
creditors;
13.The name or title and the address of the bank or the post office to collect payments
on behalf of the company;
14.The name or title of the underwriter or the distributing agent(s), if any, and the
covenants contained in the mandate;
15.The type, name and evidential documents of the security or collateral, if any,
provided for issuing the corporate bonds;
16.The name or title and the evidential documents of the guarantor(s), if any, for
the issuance of the corporate bonds;
17.The facts or the current status of previous contract violating act or delay in
payment of principal and interest of indebtedness of the company in respect of the
corporate bonds previously issued or other liabilities incurred by the company, if any;
18.If the corporate bonds to be issued are convertible into shares, the method of
such conversion;
19.If share subscription warrants is associated with the corporate bonds to be
issued, the method for exercising such option;
20.The minutes of the meeting of the board of directors involved;
21.Other matters pertaining to the issuance of the corporate bonds, or other
requirements stipulated by the competent authority in charge of securities affairs.
Issue of corporate bonds, convertible bonds, or corporate bonds with warrants to
specific creditors shall be free from the restrictions set out in Item 2, Article 249
and Item 2, Article 250 hereof provided, however, that the company shall, within 15
days after the issuance thereof, submit to the authority in charge of securities
affairs for its records a report on the issuance thereof accompanied with relevant
supporting information. Companies eligible for issuing corporate bonds to specific
creditors shall not be limited to the companies listed on centralized trading floor
or over the counter trading places, and the companies whose shares are issued to
the public.
The number of creditors to whom the corporate bonds are to be issued shall not
exceed 35 persons, but this limitation shall not apply, if the subscribers are of
financial institutions.
In the event of any change in any of the particulars declared under the preceding
Paragraph, the company shall file to the competent authority in charge of securities
affairs an application for correction. The responsible person(s) who fail(s) to apply
for such correction shall be subject to a fine of not less than NT$ 10,000 but
not more than NT$ 50,000 to be imposed by the competent authority in charge of
securities affairs.
The information as required in Item 7; Items 9 through 11; and Item 17 of Paragraph I
under this Article shall be audited and certified by a certified public accountant;
while the information as required in Items 12 through 16 shall be verified and
certified by a practicing lawyer.
The trustees as required in Item 12, Paragraph I under this Article shall be
limited to banking and trust enterprises, and shall be appointed at the time
when applying for issue of corporate bonds and shall be paid by the company
for their services.
In the event the aggregate number and value of the corporate bonds convertible
into shares as set forth in Item 18 or of the aggregate number and value of the
shares subscribable under Item 19 of Paragraph I of this Article plus the total
number of outstanding shares, the total number of shares convertible from the
corporate bonds previously issued, the total number of shares subscribable by
holders of the share subscription warrants associated to the special shares
previously issued, and the total number of shares subscribable by holders of
share subscription warrants previously issued exceeds the total number of shares
specified in the articles of incorporation, the issue of convertible corporate
bonds may be effected only after a change or alteration of the Articles of
Incorporation for increasing the amount of capital stock has
been made.
Article 248-1
A company issuing convertible bonds or corporate bonds with warrants to
specific creditors in accordance with the provision of the preceding paragraph
shall be approved by the meeting of the board of directors as provided for
in Article 246 and by the resolution of shareholders' meeting. However,
a public company shall comply with the provisions otherwise stipulated by the
competent authority in charge of securities affairs.
Article 249
Under any of the following circumstances, a company shall not issue unsecured
corporate bonds;
1. Within 3 years from the date of settlement, where the company has done any
act in breach of contract, or has been in default of payment of principal and
interest, in respect of previously issued corporate bonds or other debts,
although the debt is now settled; or
2. Where the company's average annual net profit, after paying tax, of the
most recent three years or, in case the company has been in operation for less
than three years, of the years the company is in operation, does not reach one
hundred fifty per cent of the total amount of interest payable on corporate
bonds intended to be issued.
Article 250
Under any of the following circumstances, a company shall not issue corporate bonds:
1.Where the company has done any act in breach of contract, or has been in default
of payment of principal and interest, in respect of previously issued corporate
bonds or other debts, and such state of thing still exist; or
2.Where the company's average annual net profit, after paying tax, most recent
three years or, in case the company has been in operation for less than three years,
of the years the company is in operation, does not reach one hundred per cent of
the total amount of interest payable on corporate bonds intended to be issued,
provided, however, that corporate bonds that are issued under bank guarantee shall
not be restrained.
Article 251
After approval to issue corporate bonds is granted to a company, if any of the
particulars in the application shall be found contrary to law or ordinance, or
fraudulent, the authority in charge of securities affairs may annul the approval.
In the event of the aforesaid annulment of approval, the invitation to subscriptions
in respect to unissued bonds shall be called off, and all issued bonds shall be
redeemed immediately. The responsible persons of the company shall be jointly liable
to compensate the company and the subscribers for loss or damage resulting there-from.
The provisions of Article 135, Paragraph 2, shall apply, mutatis mutandis, to the
circumstances specified in this article, Paragraph 1.
Article 252
After approval of the application for issuing corporate bonds, the board of directors
shall, within thirty days after receipt of the notice of such approval, start inviting
subscriptions by preparing forms of subscription, setting forth therein all the
particulars enumerated in Paragraph I, Article 248, and the title of the authority
in charge of securities affairs granting the approval, together with the date and
the reference number of the approval letter, and by making a public announcement
thereof. But the financial statements as required in Item 11, the covenants set
out in the mandate as required in Items 12 and 14, the evidentiary documents as
required in Items 15 and 16, and the minutes of the meeting as required in Item 20
under Paragraph I, Article 248 of this Act need not be declared in the public
announcement.
Where the company has failed to begin inviting subscriptions during the aforesaid
time limit but still desires to invite subscriptions, a new application shall be
filed therefore.
If the director designated to represent the company fails to prepare the forms of
subscription in accordance with the provisions of Paragraph I, such director shall
be subject to a fine of not less than NT$ 10,000 but not more than NT$ 50,000 to be
imposed by the authority in charge of securities affairs.
Article 253
Subscribers shall fill in the forms of subscription by indicating therein the
amount of subscription and their domiciles or residences, affixing their
respective signatures or seals thereon, and assume the obligation to pay the
amount they have filled in the forms of subscription.
Subscribers who buy bearer corporate bonds with cash on the spot of subscription
need not fill in the aforesaid forms of subscriptions.
Article 254
The Board of Directors shall after subscriptions have been made by subscribers,
request such subscribers to pay in full the amounts they have subscribed.
Article 255
Before making the request provided for in the preceding article, the Board
of Directors shall prepare a complete list, setting forth therein the name
and domiciles or residences of and the amount subscribed by, all subscribers
or registered corporate bonds and also the number, serial numbers and amount
of money of all bearer corporate bonds already issued, and send the list
together with the documents set forth in Article 248, Paragraph 1, to trustees
of corporate bondholders.
The aforesaid trustees shall, for the interest of subscribers, have the
right to check and supervise the performance by the company of the obligation
arising from the issue of corporate bonds.
Article 256
Mortgages or pledges established by the company for the purpose of issuing
corporate bonds may be taken over by the trustees for the bondholders and may
be established prior to the issue of corporate bonds.
The trustees shall be responsible for the enforcement and safe-keep of the
aforesaid mortgages or pledges or the securities furnished under the mortgages
or pledges.
Article 257
Certificates of corporate bonds shall, prior to their issuance, bear serial
numbers, issuing dates and all the particulars as required Items 1 to 4,
and Item 18 and Item 19 under Paragraph I of Article 248 of this Act. If the
corporate bonds to be issued are issued under guarantee, or are convertible to
shares, or may be used for subscribing shares, they shall be marked with the
words of "Guaranteed", "Convertible" and/or "share subscription allowed",
and shall be affixed with signature or seal of the director representing
a company, and they shall be certified by the bank which is competent to
certify bonds under the laws.
In addition to the particulars to be indicated on the certificates of corporate
bonds as required by the receding Paragraph, the name or title and the signature
or seal of the guarantor(s) shall also be indicated and affixed on the face of
the secured corporate bond certificates.
Article 257-1
(Deleted)
Article 257-2
The company issuing corporate bonds may be exempted from printing the certificate(s)
in respect of the corporate bonds issued by it, but shall register the issued bonds
with a centralized securities depositary enterprise and follow the regulations of
that enterprise.
The transfer and creation of pledge for the corporate bonds registered with a
centralized securities depositary enterprise shall be handled by the company or
by way of book-entry transfer; Article 164 of this Act and Article 908 of the
Civil Code shall not apply.
The preceding paragraph shall not apply to bonds printed but not returned to
the company.
Article 258
The counterfoil of corporate bonds shall bear the serial numbers of all such
bonds and set forth the following particulars:
1.The names or titles and domiciles or residences of corporate bondholders;
2.Particulars as required in Items 2 to 4, the names of trustees as required
in Item 12, the security/ collaterals and guarantors as required in Items 15
and 16, the particulars concerning conversion as required in Item 18; and the
subscription as required in Item19 of Paragraph I, Article 248 of this Act.
3.The date of issue of the corporate bonds; and
4.The date on which each corporate bond is procured by a corporate bondholder.
Bearer corporate bond certificates shall be marked with the word "bearer"
in lieu of the statement required under Item 1 of the preceding paragraph.
Article 259
If the proceeds realized from the issue of corporate bonds are applied for
usage other than that stipulated without first applying for approval of
such change, the responsible persons of the company shall be subject to
imprisonment for a period not exceeding one year, detention and/or a fine
not exceeding NT$60,000, and shall be liable to compensate the company for
any loss or damage resulting there-from.
Article 260
Registered corporate bond certificates may be transferred with endorsement
thereon by the holders; unless the name or title of the transferee is
recorded in the bond certificate, and the name or title and domicile or
residence of the transferee are recorded in the counterfoil of the corporate
bonds, such transfer shall not be set up as a defense against the company.
Article 261
Holders of bearer bonds may at any time request to have them converted into
registered bonds.
Article 262
Where it is prescribed that corporate bonds may be converted into shares,
the company shall have the obligation to allot shares in accordance with
the prescribed method of conversion; however, the corporate bondholders
shall have the right to choose.
Where the corporate bond is vested with share subscription right, the issuing
company shall have the obligation to allot, in accordance with the subscription
regulations, the shares for the holder of corporate bond to exercise the
subscription right provided, however that the holder of the share subscription
warrant shall have the option whether to exercise such right or not.
Article 263
The company, which issues corporate bonds, or the trustees of corporate bondholders,
or the bondholders holding more than five per cent of the total corporate bonds in
the same issue, may, for matters concerning the common interest of corporate
bondholders convene meetings of corporate bondholders in the same issue.
Resolutions at the aforesaid meeting shall be adopted by two-thirds or more of
the votes of bondholders present who hold bonds representing over three-fourths
of the total number of corporate bonds and each bondholder shall have one vote
for each minimum par value of the bonds.
A holder of bearer corporate bond certificates shall not attend a meeting of
corporate bondholders referred to in Paragraph One unless he/she shall have
deposited his/her bond certificates with the company five days before the meeting.
Article 264
The resolutions adopted at the meeting of corporate bondholders as provided
in the preceding article shall be recorded in the minutes of meeting, signed
by the chairman, and reported to the local court for approval and publication,
after which such resolutions shall then bind of all corporate bondholders and
shall be executed by trustees of corporate bondholders, unless otherwise
designated by the meeting of corporate bondholders.
Article 265
The court shall not approve the resolutions of a meeting of corporate bondholders
under any of the following certificates:
1.The procedure in convening a meeting of corporate bondholders or the method of
adopting resolutions at the meeting is in violation of law or ordinance or
statement contained in the subscription forms;
2.The resolution is not led to adoption in a proper way;
3.The resolution is apparently unjust and unfair; or
4.The resolution is contrary to the general interest of corporate bondholders.
Section 8.Issue of New Shares
Article 266
The provisions contained in this section shall govern the issue of new shares by
installments under Article 156, Paragraph Four.
The issue of new shares of a company shall be determined by the Board of Directors
by a resolution adopted by a majority vote at a meeting attended by over two-thirds
of the directors.
The provisions of Article 141 and Article 142 shall apply mutatis mutandis to the
issue of new shares.
Article 267
Unless otherwise approved specifically by the central authority in charge of the
object enterprise, when a company issues new shares, there shall be ten to fifteen
per cent of such new shares reserved for subscription by employees of the company.
When a government operated enterprise issues new shares, it may, after obtaining
the special approval from the competent authority in charge of the said enterprise,
reserve no more than ten per cent of such new shares for subscription by its
employees.
In issuing new shares, a company shall make public announcement and advise, by
notice, its original shareholders to subscribe for, with preemptive right, the new
shares, except those reserved under either of the preceding two paragraphs, in
proportion respectively to their original shareholding and shall state in the notice
that if any shareholder fails to subscribe for new shares, his right shall be
forfeited. Where a fractional percentage of the original shares being held by a
shareholder is insufficient to subscribe for one new share, the fractional
percentages of the original shares being held by several shareholders may be
combined for joint subscription of one or more integral new shares or for
subscription of new shares in the name of a single shareholder. New shares left
unsubscribed by original shareholders may be open for public issuance or for
subscription by specific person or persons through negotiation.
The right to subscription of new shares as provided for in the preceding three
paragraphs, except those reserved for subscription by employees, may be separated
from the rights in original shares and transferable independently.
The provisions provided in Paragraphs One and Two under this Article for reserving
the right of subscribing new shares by employees shall not apply to the case where
the new shares are distributed to original shareholders as dividend shares capitalized
with the reserve fund or the value increments of assets.
A company may restrain the shares subscribed by its employees under Paragraph One
or Paragraph Two of the article from being transferred or assigned to others within
a specific period of time which shall in no case be longer than two years.
Qualification requirements of employees, including the employees of parent s or
subsidiaries of the company meeting certain specific requirements, entitled to
receive shares in accordance with the provision of Paragraph One, may be specified
in the Articles of Incorporation.
The provisions set out in this Article shall not apply to the company which is
merged by or with another company, or is split up, or is under reorganization, or
is issuing new shares in accordance with the provisions set out in Article 167-2,
Article 235-1, Article 262, or Paragraph I, Article 268-1 of this Act.
A company issuing restricted stock for employees shall not apply Paragraphs One
to Six of this Article and shall adopt such resolution, at a shareholders’meeting,
by a majority of the shareholders present who represent two-thirds or more of
the total number of its outstanding shares.
In the event the total number of shares represented by the shareholders present
at a shareholders’ meeting of a public company is less than the percentage of
the total shareholdings required in the preceding Paragraph, the resolution may
be adopted by two-third of the voting rights exercised by the shareholders present
at the shareholders’ meeting who represent a majority of the outstanding shares
of the company.
Qualification requirements of employees, including the employees of parents or
subsidiaries of the company meeting certain specific requirements, entitled to
receive restricted stock for employees in accordance with the provision of
Paragraph Nine, may be specified in the Articles of Incorporation.
The competent authority in charge of securities shall prescribe rules governing
the issuance amount, issuance price, issuance conditions and other matters for
compliance for a company offering its shares to the public and issuing new shares
in accordance with the preceding three Paragraphs.
The responsible person of a company violating the provisions of Paragraph I
under this Article shall be subject to a fine of not less than NT$ 20,000 but
not more than NT$ 100,000.
Article 268
For issue of new shares, a company shall, unless such new shares are fully
subscribed by its original shareholders and employees or by specific persons
by agreement without any new share being open for public issuance, file an
application, setting forth therein the following particulars, with the competent
authority in charge of securities affairs for approval of public issuance:
1.The name of the company;
2.The originally authorized total number of shares, number of shares issued,
and the value thereof;
3.The total number of new shares to be issued, par value of each share and
other terms of issue;
4.The financial statements as required by the competent authority in charge
of securities affairs;
5.The capital increase plan;
6.Where special (preference) shares are to be issued, the kinds and number of
such shares, and the par value of each share, together with the matters specified
in Items One to Three, Six and Eight of Paragraph One, Article 157;
7.The number and amount of shares can be subscribed by each holder of a share
subscription warrant or the person entitled to subscribe preferred shares;
8.The name and address of bank or post office to collect payment on shares on
behalf of the company;
9.The name of the underwriter or distribution agency, if any, and matters agreed
upon between the company and the underwriter or distributing agency;
10.The minutes indicating the resolution for the issue of new shares; and
11.Other matters as may be required by the competent authority in charge of
securities affairs.
In the event of any change in any of the particulars required under the preceding
paragraph, the company shall apply to the competent authority in charge of securities
affairs for correction. The responsible person of the company who fails to apply for
such correction shall be imposed a fine by the competent authority in charge of
securities affairs of not less than NT$ 10,000 but not more than NT$ 50,000.
All matters specified in Items 2 to 4 and 6 of Paragraph I shall be examined and
certified by a certified public accountant, and those in Items 8 and 9, Paragraph I
under this Article shall be examined and certified by a practicing lawyer.
The provisions of Paragraphs I and II under this Article shall not apply to the
issue of new shares as referred to in Paragraph V of Article 267 of this Act.
In case the aggregate of the number of new shares to be issued by a company and
the number and amount of share subscription warrants or the shares subscribable
under the ancillary special share subscription rights plus the total number of
outstanding shares, the total number of shares which can be acquired under
outstanding convertible corporate bonds, the total number of shares subscribable
under outstanding corporate bonds vested with share subscription rights, the
total number of special shares subscribable under outstanding ancillary special
share subscription warrants, and the total number of shares subscribable under
outstanding share subscription warrants exceeds the total number of shares
authorized by the Articles of Incorporation, such excessive number of shares
may be issued only after completing the procedure for capital increase by making
necessary changes or alterations in the Articles of Incorporation.
Article 268-1
The company issuing share subscription warrants or special shares under ancillary
share subscription rights shall have the obligation to allot the shares in accordance
with the share subscription regulations, without being bond by the provisions set out
in Article 269 and Article 270 of this Act provided, however, that the holders of such
share subscription rights shall have the option whether to exercise such subscription
rights or not.
The provisions set out in Paragraph II, Article 266; Paragraphs I and II, Article 271;
Article 272; and Paragraphs II and III, Article 273 hereof shall apply, mutatis mutandis,
to company issuing share subscription warrants.
Article 269
Under any of the following circumstances a company shall not publicly issue special
shares with preference;
1.Where its average net profit of the most recent three years or, in case the
company has commenced its business for less than three years, of the years the
company is in operation, after paying taxes, is not sufficient to pay dividends
on special shares already issued and intended to be issued;
2.Where it has been in default in making regular payment of dividends on special
shares already issued.
Article 270
Under any of the following circumstances a company shall not publicly issue new shares:
1.Where it has incurred losses in the most recent two consecutive years; this, however,
shall not apply where the nature of business requires a longer period for preparation
or it has a sound business plan under which its profit-making capability will be
improved; or
2.Where its assets are not sufficient to meet liabilities.
Article 271
After approval to issue new shares publicly is granted to a company, if any of
the particulars in the application shall be found contrary to law or ordinance or to
be fraudulent, the authority in charge of securities affairs may annul the approval.
In case of the annulment in accordance with the preceding paragraph, all unissued shares
shall be withheld from issuing and holders of issued shares may, from the time of
annulment, demand repayment at the original fixed value of the shares together with legal
interest and may claim compensation for loss or damage resulting there-from.
The provisions of Article 135, Paragraph 2 shall apply, mutatis mutandis, to this article.
Article 272
When a company publicly issues new shares, the payment on such shares shall be in cash;
where such shares are not issued to the public; however, but rather subscribed to by
shareholders or by particular persons by agreement, any property necessary to the business
of the company may be in lieu thereof.
Article 273
When a company publicly issues new shares, the board of directors shall prepare forms
of subscription, setting forth therein the following particulars, to be filled by each
subscriber with the number of shares subscribed, the kind and value thereof, and his
domicile or residence, and to be signed and sealed by the subscriber:
1. Particulars specified in Article 129 and Paragraph One of Article 130;
2. The total number of shares originally authorized or the number of shares already
issued out of the total number of authorized shares after increase of capital and
the value thereof;
3. Particulars specified in Article 268, Paragraph 1, Items 3 to 11; and
4. The time of payment for shares subscribed.
When a company publicly issues new shares, the company shall insert in the aforesaid
forms of subscription the serial number of the document of approval and the date of
approval by the competent authority in charge of securities affairs and shall, within
thirty days after receipt of the notice of approval from such authority, publicly
announce the particulars specified in the preceding paragraph together with the serial
number of the document of approval and the date of approval and issuance of such
shares. The business report, inventory, meeting minutes and the matters agreed upon with
underwriter or distributing agency need not be publicly announced.
After the expiration of the time-limit set forth in the preceding paragraph, if a
company still desires to invite public subscriptions, a new application shall be filed.
If the director designated to represent the company fails to prepare the forms of
subscription in accordance with the provisions of Paragraph I under this Article,
such director shall be subject to a fine of not less than NT$ 10,000 but not more
than NT$ 50,000 to be imposed by the competent authority in charge of securities affairs.
Article 274
Where a company issues new shares other than to the public, under the proviso
to Article 272, it shall still be required to make the forms of subscription available as
required by Paragraph I of the preceding Article. If property other than cash is paid
by subscribers, additional particulars such as the name/title of the subscriber, the type,
the quantity and the value of or the standards for evaluation of the value of the property
furnished by the subscriber, and the number of shares allotted to the subscriber by the
company shall also be stated in the form of subscription.
After accepting property other than cash payment, the Board of Directors shall pass it on
to the supervisor for inspection and comment, and shall report to the authority for approval.
Article 275
(Deleted)
Article 276
Upon expiration of the time limit set forth for payment on new shares, if there are still
some not subscribed or some subscribed but withdrawn or not yet paid for, the shareholders
who subscribed the new shares and paid for them may set a time limit of over one month to
press the company for full subscription and full payment on shares, failing which the
shareholders may withdraw their subscriptions and the company shall refund the money
paid on shares together with legal interest.
Directors whose acts are responsible for loss or damage to the company under the aforesaid
circumstance shall be jointly liable for compensation.
Section 9.Modification or Alteration of the Articles of Incorporation
Article 277
A company shall not modify or alter its Articles of Incorporation without a resolution
adopted at a meeting of shareholders.
The aforesaid resolution at the meeting of shareholders shall be adopted by a majority
of the shareholders present who represent two-thirds or more of the total number
of its outstanding shares.
For a company that has had its share certificates publicly issued, if the total number
of shares represented by shareholders present at a shareholders' meeting is not
sufficient to meet the criteria specified in the preceding paragraph, the resolution may
be adopted by two-thirds of the votes of the shareholders present at a shareholders' meeting
who represent a majority of the total number of issued shares.
Where stricter criteria for the total number of shares represented by shareholders present
at a shareholders' meeting and the number of votes required to pass a resolution as referred
to in the preceding two paragraphs are specified in the Articles of Incorporation, such
stricter criteria shall govern.
Article 278
(Deleted)
Article 279
In case of replacement of old share certificates by new ones as a result of a reduction
in capital, the company shall, after the registration of such reduction in capital,
serve a notice upon each shareholder and require all shareholders to exchange their
share certificates for new ones within a period of not less than six months, and shall
make it known to all shareholders that any person who fails to effect such exchange
within the time limit may forfeit all rights he shall otherwise enjoy as a shareholder.
Any shareholder who fails to make the exchange within the aforesaid time-limit shall
forfeit all rights and privileges he shall otherwise enjoy as a shareholder, and the
company may dispose of his shares by auction and pay the proceeds realized there-from
to such shareholder.
Responsible persons of the company who violate the provision of Paragraph One pertaining
to the time limit for notice shall be severally subject to a fine of not less than
NT$3,000 but not more than NT$15,000.
Article 280
In the event of a consolidation of shares as a result of reduction in capital, the
provisions of Paragraph 2 of the preceding article shall apply mutatis mutandis to
the disposition of shares which cannot be consolidated.
Article 281
The provisions of Article 73 and Article 74 shall apply mutatis mutandis to reduction
of capital.
Section 10.Reorganization of a Company
Article 282
Where a company which publicly issues shares or corporate bonds suspends its business
due to financial difficulty or there is an apprehension of suspension of business thereof,
but there is a possibility for the company to be constructed or rehabilitated, the company
or any of the following interested parties may apply to the court for reorganization:
1. Shareholders who have been continuously holding shares representing ten per cent
or more of the total number of issued shares for a period of six months or longer;
2. Creditors of the company who have claims equivalent to ten per cent or more of
the capital from the total number of issued shares;
3. Labor unions; or
4. Two-third or more of the Employees of a company.
For filing the reorganization application by a company under the preceding Paragraph,
the Board of Directors of the company shall adopt a resolution by a majority vote of
the directors present at a meeting of the Board of Directors attended by over two-thirds
of all directors.
The labor unions referred to in Item Three, Paragraph One denote the following labor unions:
1. Corporate union;
2. The industrial union whose members are joined by more than one half of employees
employed by the company.
3. The professional union whose members are joined by more than one half of employees
with the same professional skills employed by the company.
The employees referred to in Item Four, Paragraph One shall be calculated based on
the employee number of the roster of labor insurance of the company at the date of
applying for reorganization.
Article 283
The application for reorganization of a company shall be filed to the court in
writing in five copies by the applicant(s) and shall state therein the following particulars:
1. The name and domicile or residence of the applicant and a statement on the status of
the petitioner as such; in case the applicant is a juristic person, or an organization or
agency, the title, the business place of office of the applicant;
2. The name or title and the location of the statutory representative or the agent,
if any, and the relationship between the statutory representative and the applicant;
3. The name, location, office, business place, and the name, domicile or residence
of the responsible person representing the company;
4. The cause and the fact of the application;
5. The business undertaken by the company and the condition of such business;
6. The reports, financial statements, records and books prepared by the company for
the most recent year in accordance with the provisions set out in Article 282
hereof. If the application date falls beyond the sixth month after commencement of
a year, a separate semi-annual balance sheet for the first half of the current year
shall also be submitted; and
7. Opinions on the reorganization of the company.
The matters as required in Items 5 through7 of the preceding Paragraph may be
supplemented by attachments.
In case the application is filed by the company, a substantial reorganization proposal
shall be submitted. In case the application is filed by shareholders, creditors,
labor unions or employees employed by the company, the documents identifying the
qualification of the applicants shall be filed along with the application, but
particulars as required in Items 5 and 6 of Paragraph I under this Article need not
be stated.
Article 283-1
Under any of the following circumstances, an application for reorganization shall
be dismissed by the court:
1.Where the application is not filed in accordance with the proper procedure
provided, however, that if the improper filing procedure can be rectified, the
applicant shall be ordered to take corrective action;
2.Where the company has not made public issuance of shares or corporate bonds;
3.Where the company has been adjudicated bankrupt by a final ruling;
4.Where the settlement resolution made by the company in accordance with the
Bankruptcy Law has become final;
5.Where the company has been dissolved; or
6.Where the company has been ordered to wind up and to liquidate within a
given time limit.
Article 284
Subject to the dismissal of the application as provided for in the preceding Article,
the court shall, when it receives an application for reorganization, forthwith send
copies of such application to the competent authority, the central authority in
charge of end-enterprise concerned, and the authority in charge of securities
affairs, and shall solicit their substantial opinions as to whether the reorganization
shall be effected or not.
The court may also solicit the opinions on the proposed reorganization from the
taxation authority and other relevant authorities at the locality of the company.
The authorities whose opinions are solicited by the court in accordance with the
provisions of the preceding two Paragraph shall give their opinions within 30 days.
In case the applicants are shareholders or creditors of a company, the court shall
send a notice with a copy of the application to the company.
Article 285
In addition to the requests for opinions as provided in the preceding article, the
court may also select and appoint a person with specialized knowledge or experience
in the operation of the business of the company but without any interest therein as
the inspector who shall, within thirty days after appointment, complete the following
examinations and submit a report accordingly:
1.The actual business, financial condition, and evaluation of the assets of the company;
2.To examine in the light of the analysis of the business and financial conditions,
the assets and production equipment of the company to see whether the reconstruction
or rehabilitation of the company is possible or not;
3.To examine the merits and demerits of the previous business operation of the
company and the records of management of the operation by the responsible person
of the company to see whether there was any neglect or improper practices;
4.To examine whether there is any fraudulent or false statement in the application;
5.To examine the feasibility of the reorganization proposal, if the applicant is
the company; and
6.To examine other relevant reorganization proposals.
The inspector may inspect all books, records of accounts, documents and property
relating to the business or finance of the company. The directors, supervisors,
managerial personnel, or other staff personnel shall have the obligation to answer
the enquiries made by the inspector regarding the operation and financial activities.
Directors, supervisors, managerial officers and other employees of the company who
refuse the aforesaid examination or refuse to answer the aforesaid questions
without reason or make false statements shall be severally subject to a fine
not less than NT$ 20,000 but not more than NT$ 100,000.
Article 285-1
Based on the report made by the inspector and by making reference to the opinions
provided by the central authority in charge of the end enterprise concerned, the
authority in charge of securities affairs, the central authority in charge of
financial affairs, and other relevant authorities and organizations, the court shall,
within 120 days after its receipt of a reorganization application filed by a company,
render a ruling to approve or to dismiss the said re-organization application and
shall notify all authorities concerned of such ruling accordingly.
The 120-day reviewing period fixed in the preceding Paragraph may be extended by
a ruling to be made by the court for an additional 30 days provided that no more
than two extensions may be made.
Under either of the following circumstances, the court may dismiss a company
re-organization application:
1.Where any statement or information contained in the written application documents
is found false or untrue; or
2.Where reconstruction and/or rehabilitation as proposed by the applicant is deemed
unfeasible after considering the business and financial conditions of the company.
When dismissing a company reorganization application by a ruling to be rendered in
accordance with the provisions set out in the preceding Paragraph, the court may,
ex officio, make a bankruptcy pronouncement, if the conditions for bankruptcy are met.
Article 286
Prior to a ruling for reorganizers of a company, the court may order responsible
persons of the company to prepare and submit lists of creditors and shareholders
of the company within seven days according to the nature of their rights
respectively, stating therein also their domiciles or residences and the total
amount of credits or the total amount of money in shares.
Article 287
Prior to rendition of a ruling for reorganization of a company, the court may,
at the request of the company or an interested party or ex officio, render a ruling
for the following disposal:
1.Disposal for preservation of the company's property;
2.Restriction on the business of the company;
3.Restriction on performance of obligation of the company and exercise of claim
against the company;
4.Suspension of proceedings for bankruptcy, com- position, or compulsory execution
and others;
5.Prohibition of transfer of registered share certificates; and
6.Assessment of the liabilities of responsible persons of the company to compensate
the company for loss or damage and preservation of their property.
The term of validity of the ruling to be made under the preceding Paragraph shall
not exceed 90 days, unless otherwise fixed by the court; and may be extended when
necessary by the court at the request of the company or an interest party provided
that the duration of each extension shall not exceed 90 days.
In case the ruling for dismissing a company reorganization application becomes
final prior to the expiry of the term of validity referred to in the preceding
Paragraph, then the ruling rendered under Paragraph I under this Article shall
become null and void.
In rendering a ruling under the provisions of Paragraph I of this Article, the
court shall inform, by a notice, the authority in charge of securities affairs
and the central authority in charge of the relevant end enterprise.
Article 288
(Deleted)
Article 289
At the time of ruling for reorganizers, the court shall select and appoint a
person with specialized knowledge and experience in the operation of the business
of such company or a banking institution as reorganization supervisor and decide
on the following matters:
1.The period and place for declaring rights of creditors and shareholders, and
the period shall not be less than ten days nor more than thirty days from the
date of ruling;
2.The date and place to examine rights of creditors and shareholders thus declared,
and the date shall be within ten days of the date of expiration of the aforesaid
period for declaration; and
3.The date and place of the first meeting of parties concerned, and the date
shall be within 30 days of the date after expiration of the period for declaration
mentioned in Item 1.
The aforesaid reorganization supervisor shall act under the supervision of the
court and may be discharged by the court at any time.
In case there is a plural number of reorganization supervisors, supervision on
the execution of all matters relating to reorganization shall be effected by
a majority vote of them.
Article 290
The reorganizers of the company shall be selected and appointed by the court
from among the relevant experts recommended by creditors, shareholders, directors,
the central authority in charge of the relevant end enterprise, and/or the
authority in charge of securities affairs.
The provisions set out in Article 30 hereof shall apply mutatis mutandis to
reorganizers.
In the meeting of interested parties, if the result of the voting conducted
in groups under Article 302 shows that two or more groups prefer a change of
reorganizers, a list of candidates may be submitted to the court along with
an application for such change.
In case there is a plural number of reorganizers, execution of all matters
relating to reorganization shall be effected by a majority vote of them.
In the execution of duties, the reorganizers shall act under the supervision
of the reorganization supervisors. In case a reorganizer Acts in violation of
the laws or improperly, the reorganization supervisors may apply to the count
for discharging his/her office and selecting a new one.
In the execution of duties, the reorganizers shall secure the prior consent of
the reorganization supervisor:
1.Disposal of property of the company outside the scope of its business;
2.Change of the business of the company or in the ways of operation;
3.Contract of loans;
4.Conclusion or rescission of important or long term contracts, the scope of
which shall be determined by the reorganization supervisor;
5.Proceeding in litigation or arbitration;
6.Waiver or assignment of rights of the company;
7.Dealing in cases where others exercise rights of retrieval, rescission or set-off;
8.Appointment and removal of important officers of the company; and
9.Other acts restricted by the court.
Article 291
After rendering a ruling of company reorganization, the court shall publish the
following particulars by means of a public notice:
1.The text and the date of the ruling of company reorganization;
2.The name or title and the domicile or address of the reorganization supervisor
and the reorganizers;
3.The period, date and place as fixed in accordance with the provisions of
Paragraph I, Article 289 hereof; and
4.The legal consequences which may result from the negligence of the creditors
of the company to declare their claims and rights.
The court shall still be obligated to serve notice in writing of the ruling and
the particulars contained therein to the reorganization supervisor, the reorganizers,
the company and the known creditors and the shareholders.
At the time the court sends the aforesaid notice of ruling to the company, the
court shall send a court clerk to write down in the accounting books the
account-closing decision, to affix thereon his signature or seal, and to write
down a brief statement describing the condition of such accounting books.
Article 292
The court shall, after rendering ruling for reorganization, notify the competent
authority with a copy of such ruling for registration of the institution of
reorganization; the company shall post the copy of the aforesaid ruling on the
notice board of the its registered office.
Article 293
After delivery of the ruling for reorganization of the company, the operation of
the business of the company and the power of controlling and disposing of the
property thereof shall be transferred to reorganizers, and the reorganization
supervisor shall supervise such transfer, which shall then be reported to the
court. Upon such transfer, the shareholders' meeting, directors and supervisors
shall cease to perform their duties and to exercise their powers.
At the time of the aforesaid transfer, the directors and managerial officers of
the company shall hand over to the reorganizers all statements and records of
accounts and documents relating to the business and finance of the company and
all property thereof.
The directors, supervisors, managerial personnel, or other staff personnel shall
have the obligation to answer the enquiries made by the reorganization supervisors
or reorganizers regarding the operation and financial activities.
Directors, supervisors, managerial officers or other members of the staff of the
company, for any of the following acts, shall be severally subject to imprisonment
for a period not exceeding one year, detention and/or a fine not exceeding NT$60,000:
1.Refusal to transfer;
2.Concealment, destruction or damage of statements, records of accounts or documents
relating to the business or financial condition of the company;
3.Concealment, destruction, or removal of property of the company, or the disposal
of such property a manner prejudicial to creditors;
4.Refusal to answer questions mentioned in the aforesaid paragraph without reason; and
5.Fabrication of debts or acknowledgement of untrue debts.
Article 294
After a ruling for reorganization is rendered, all procedures of bankruptcy,
composition, compulsory execution and other litigation involving property shall
be suspended in due course.
Article 295
The disposition made by the court in accordance with the provisions of Article 287,
Paragraph 1, Items 1, 2, 5 and 6 shall remain in effect regardless of the ruling
for reorganization, and in the absence of such disposition, the court may still
render such rulings on the application of an interested party or the reorganization
supervisor or ex officio after having rendered the ruling for reorganization.
Article 296
All rights of creditors of the company established prior to the ruling for
reorganization shall be rights of creditors in reorganization; all rights with
preference for repayment according to law shall be preferred rights of creditors
in reorganization; all rights secured by mortgages, pledges or rights of retention
shall be secured rights of creditors in reorganization; and all rights without such
security shall be rights of creditors without security. All such rights of creditors
shall not be exercised unless in a accordance with reorganization procedures.
The provisions of the Bankruptcy Law relating to the rights of creditors in
bankruptcy, with the exception of provisions governing right of discriminative,
and preferential rights shall apply mutatis mutandis to the aforesaid rights of creditors.
Rights of retrieval, rescission or set off shall be exercised against the reorganizers.
Article 297
All creditors in reorganization shall produce documents to sufficiently prove
the existence of their rights for declaring their rights to the reorganization
supervisor and, if so declared, the prescription is interrupted and, if not
declared, no repayment shall be made according to the reorganization procedures.
In case of failure to declare as provided for in the preceding paragraph for causes
not attributable to the persons of whom declaration is required, such persons may
make good the declaration within fifteen days after extinction of the cause;
however, no declaration shall be accepted after the reorganization plan has been
adopted at a meeting of the concerned parties.
Rights of shareholders of the company shall be based on records in the shareholders’
roster.
Article 298
The reorganization supervisor shall, after the expiration of the period for
declaring rights, in accordance with findings in the preliminary examination,
prepare lists of preferred creditors in reorganization secured creditors in
reorganization, unsecured creditors in reorganization and shareholders
respectively, stating therein the nature of their rights, sums of money
and number of votes, and shall submit a report to the court, keep all of the
above at a suitable place, and publicly announce the date and place of such
keeping so that the creditors in reorganization, shareholders and other
interested persons may inspect, all to be done three days before the date
mentioned in Article 289, Paragraph 1, Item 2.
The number of votes of creditors in reorganization shall be determined in
proportion to the amounts of money involved in their credits. The number of
votes of shareholders shall be provided in the Articles of Incorporation.
Article 299
In the court's session of hearing rights of creditors in reorganization and
rights of shareholders, the reorganization supervisor, reorganizers, and
responsible persons of the company shall be present to answer inquiries, and
the creditors in reorganization, shareholders and other interested persons may
be present to express their opinions.
In the event of any objection to the right of creditor or the right of
shareholder, the court shall render a ruling on such right.
Any interested person who substantially contests the right of creditor or
the right of shareholder shall institute an action for determination within
twenty days after the service of the ruling referred to in the preceding
paragraph, and prove to the ruling court that such action has been
instituted. After instituting such action and before a judgment thereto becomes
irrevocable, the right concerned shall be exercised according to the contents of,
and in the amount allowed by the ruling referred to in the preceding paragraph;
however, in receiving the repayment in accordance with the plan of reorganization,
the amount received shall be deposited with a court.
A right of creditor or a right of shareholder shall be deemed final and shall
have the same effect as an irrevocable judgment against the company and all
the shareholders and creditors of the company if prior to the end of hearing
in court no objection was raised against such right.
Article 300
All creditors in reorganization and shareholders shall be concerned persons in
the reorganization of the company and shall attend meetings of concerned
persons. They may appoint a proxy to attend such meetings if they are unable
to do so in person for any cause.
The reorganization supervisor shall be the chairman of all meetings of
concerned persons and shall convene all such meetings with the exception
of the first meeting.
The reorganization supervisor, in calling meetings as provided in the preceding
paragraph, shall serve notice and public announcement five days prior to the
meeting, stating therein the purpose of the meeting. In the event that no
conclusion can be reached at one meeting, and announcement to adjourn or
postpone the meeting is made on the spot by the reorganization supervisor,
then no service of notice or public announcement is required.
At the meeting of concerned persons, the reorganizers and responsible persons of
the company shall be present to answer inquiries.
Responsible persons of the company who refuse to answer inquiries as aforesaid
without reason or make false statement in their replies shall be severally
subject to imprisonment for a period not exceeding one year, detention and/or
a fine not exceeding NT$60,000.
Article 301
The functions of the meeting of concerned persons are as follows:
1.To hear reports on business and financial conditions of the company and
opinions on reorganizers of the company;
2.To deliberate and vote on the reorganization plan; and
3.To resolve other matters relating to reorganization.
Article 302
At the meeting of concerned persons, the voting right shall be exercised in
groups of claimants as provided in Article 298, Paragraph 1, and resolutions
shall be adopted by a majority vote of over one-half of the aggregate votes
of different groups.
In the event that there is no net value of capital of the company, the
shareholders group shall not exercise voting right.
Article 303
The reorganizers shall draw up a plan of reorganization and submit same together
with reports and statements of business and finance of he company to the first
meeting of concerned persons for examination.
In the event of a change of reorganizers as provided in Article 290, the
reorganization plan shall be submitted by newly appointed reorganizers within one month.
Article 304
The following particulars, if any, in the reorganization of a company, shall be
stated clearly in the reorganization plan:
1.Changes in rights of any or all creditors in reorganization or shareholders;
2.Changes in part or all of the business;
3.Disposal of property;
4.Ways and means of paying debts and the financial source thereof;
5.Standards and methods of valuation of assets of the company;
6.Alteration of the Articles of Incorporation of the company;
7.Readjustment or reduction of employees;
8.Issue of new shares or corporate bonds; and
9.Other necessary matters.
Subject to the deadline date for discharge of all liabilities otherwise fixed,
the duration for execution of the company reorganization plan shall not exceed
one year as calculated from the date on which the court ruling of approval of
the reorganization plan becomes final. In case the reorganization plan can not
be completed as scheduled with good cause shown, an application for extension
may be filed, with prior consent of the reorganization supervisors, with the
court for a court ruling of extension provided, however, that if the reorganization
plan is still not completed upon expiry of the extended period, then the court
may, ex officio or at the petition of interested party or parties, render a
ruling of termination of the company reorganization plan.
Article 305
In case the reorganization plan is adopted at the meeting of interested parties,
the reorganizers shall apply to the court for a ruling of approval and thereupon
execute it, and shall also report such court ruling of approval to the competent
authority for its record.
The company reorganization plan approved by the court shall bind on the company
and the interested parties, and if the obligation to perform as specified in
such plan can be set up as the object of compulsory execution, the reorganization
plan may be subject to compulsory execution accordingly.
Article 306
In case the plan of reorganization is not adopted by the groups with voting
right at the meeting of persons concerned, the reorganization supervisor shall
forthwith report to the court and the court may direct modification or alteration
on fair and reasonable principle and order the meeting of persons concerned
to reconsider the plan within one month.
In case the aforesaid plan of reorganization remains not adopted upon
reconsideration at the meeting of persons concerned, the court shall render
a ruling to terminate the reorganization; however, if the company is really
worthy of reorganization the court may, as against the dissenting group, amend
the plan of reorganization in any one of the following ways and render a ruling
to approve it:
1.That the property held as security by secured creditors in reorganization together
with the right of claim is to be transferred to the company after reorganization, and
such right is to remain in existence without any change;
2.That the property held as security by secured creditors in reorganization, the
property that can be appropriated to meet repayments to unsecured creditors in
reorganization and the residual property that can be distributed to shareholders may,
on the basis of its price if fair deals and in proportion to the sharing parts to
which such creditors and shareholders are entitled, be disposed of for repayment,
distributed to those entitled to receive it, or deposited with a court; or
3.Other fair and reasonable ways beneficial to maintaining the business of the
company and protecting the right creditors.
In case the plan of reorganization mentioned in the first paragraph of the
preceding article or in the preceding paragraph cannot or need not be executed
on account of change in circumstances or for a good cause, the court may, on
application of the reorganization supervisor, reorganizers, or persons concerned,
render a ruling to order the meeting of persons concerned to reconsider. In case
there is obviously no possibility of or necessity for reorganization, the court
may render a ruling for termination of reorganization.
The aforesaid plan of reorganization adopted on reconsideration shall be
submitted in an application to the court for a ruling of approval.
In case the reorganization plan is not resolved by the meeting of the interested
parties within one year after the ruling served to the company, the court may,
ex officio or at the petition of interested party of parties, render a ruling
of termination of the reorganization; the same procedure shall be followed
if the reorganization plan is not resolved within one year after the ruling
of reconsideration served to the company by the court according to the third paragraph.
Article 307
In taking the measures as set forth in the two preceding Articles, the court
shall seek the opinions of the central competent authority, the central
authority in charge of the relevant end enterprise, and also the authority
in charge of securities affairs.
Where the court renders a ruling for termination of reorganization, it shall
notify the competent authority and provide it with a copy of such ruling; and
the competent authority shall, when the said court ruling becomes final,
forthwith make a registration of termination of the reorganization plan,
and if the conditions for bankruptcy are met, the court may, ex officio, render
a ruling to pronounce the company bankrupt.
Article 308
Except when the provisions of the Bankruptcy Law shall govern in the case
that a court has ex officio,
rendered a judgment to adjudge a company bankrupt, a ruling for termination
of reorganizers rendered by a court shall have the following effects:
1.Any disposition or effect thereof under Article 287, Article 294, Article
295 or Article 296 shall be null and void;
2.A person who has been barred from exercising his right for neglect in
declaring the right shall have such right restored; and
3.The shareholders' meeting, directors and supervisors whose powers and
functions have been suspended on account of reorganization shall have such
powers and functions restored forthwith.
Article 309
During the process of reorganization of a company, if any of the following
provisions conflict with the fact, the court may, at the request of the
reorganizers, render a ruling of other appropriate disposition:
1.The provisions of Article 277 governing amendment or alteration of the
Articles of Incorporation;
2.The provisions of Article 279 and 281 governing the period of time for
serving notice and making public announcement of and restrictions on the
reduction of capital;
3.The provisions of Article 268 to 270 and Article1 276 governing issue
of new shares;
4.The provisions of Article 248 to 250 governing issue of corporate bonds;
5.The provisions of Article 128, Article 133, Article 148 through 150,
and Article 155 governing incorporation of companies; or
6.The provisions of Article 272 governing the categories of capital contribution.
Article 310
Reorganizers of a company shall complete the reorganization plan within the
implementation schedule specified therein; and upon completion of the reorganization
plan, shall apply to the court for a court ruling of recognition of the completion
of the reorganization, and shall, after such court ruling became final, convene
a meeting of shareholders for election of directors and supervisors.
After assuming their offices as directors and supervisors, the directors and
supervisors shall, in conjunction with the reorganizers, file an application with
the competent authority for registration or for company alteration registration.
Article 311
Upon completion, the reorganization of a company shall have the following effects:
1.The rights of claims on the unpaid parts of obligatory rights already declared
shall expire except such parts as assigned to and assumed by the company after
reorganization according to the plan of reorganization; the same shall apply
to obligatory right not declared;
2.The changed, decreased or cancelled part of the right of shareholders in
consequence of the reorganization shall expire; and
3.Procedure of bankruptcy, composition, compulsory execution and other litigations
involving property of the company prior to the ruling for reorganizers shall be
ineffective.
The rights of creditors of a company against securities and other common debtors
of the obligations of the company shall not be affected by the reorganization
of the company.
Article 312
The following debts incurred during the reorganization of the company shall
have preference for repayment over the rights of creditors in reorganization:
1.Debts incurred for continued operation of the business of the company; and
2.Expenses incurred in the process of reorganization.
The aforesaid right of preference for repayment shall not be prejudiced on
account of a ruling for termination of reorganization.
Article 313
Inspectors, reorganization supervisors and reorganizers shall perform their
duties with the care of good administrators. Their remuneration shall be
determined by the court in consideration of the nature of their duties.
An inspector, reorganization supervisor or reorganizer who violates law
or ordinance in the performance of his duties, thereby causing loss or
damage to the company, shall compensate the company.
Inspectors, reorganization supervisors or reorganizers who make a false
statement or record of their acts within the scope of duties shall be
severally subject to imprisonment for a period not exceeding one year,
detention and/or a fine not exceeding NT$60,000.
Article 314
The provisions of the Code of Civil Procedure shall apply mutatis mutandis
to jurisdiction, application, notification process service, public announcement,
ruling interlocutory appeal, and other proceedings in this section.
Section 11.Dissolution, Consolidation or Merger and Split-up
Article 315
A company limited by shares shall be dissolved under any of the following
circumstances:
1.Upon occurrence of the cause of dissolution as specified in the Articles
of Incorporation;
2.Upon achievement or non-achievement of the objective of the business
undertaken by the company;
3.Upon adoption of a resolution to dissolve the company at a meeting of
shareholders;
4.Where the number of shareholders of registered share certificates is less
than two persons; except that the only one shareholder is a government agency
or a juristic person;
5.Upon consolidation or merger with another company;
6.Upon split-up of the company;
7.Upon bankruptcy of the company; and
8.Upon rendition of a dissolution order or judgment.
Under the circumstance specified in Item 1 of the preceding paragraph, the
company may continue its business operations after amendment or alteration
of the Articles of Incorporation is approved by a meeting of shareholders;
and under the circumstance set forth in Item 4, the company may continue
its business operations by increasing the number of shareholders of
registered share certificates.
Article 316
A resolution for dissolution, consolidation or merger, or split-up of a
company shall be adopted by a majority vote at a meeting of shareholders
attended by shareholders representing two-thirds or more of the total
number of the outstanding shares of the company.
For a company that has its share certificates publicly issued, if the
total number of shares represented by shareholders present at a shareholders’
meeting is not sufficient to meet the criteria specified in the preceding
paragraph, the resolution may be adopted by two-thirds of the votes of
the shareholders present at a shareholders’ meeting attended by shareholders
representing a majority of the total number of the outstanding shares of
the company.
Where a higher criteria for the total number of shares represented by the
shareholders present at a meeting of shareholders and the total number
of votes required to adopt a resolution thereat are specified in the Articles
of Incorporation of the company, such higher criteria shall prevail.
When a company is to be dissolved for any cause other than bankruptcy,
the board of directors shall forthwith notify each of the shareholders
of the essentials of such dissolution plan.
Article 316-1
In the case of merger/consolidation between two independent companies limited
by shares or between a company limited by shares and a limited company, the
surviving company or the newly incorporated company under the merger/consolidation
project shall be limited to a company organized in the form of a company
limited by shares.
In the case of split-up of a company limited by shares, the surviving company
or the newly incorporated company shall be limited to a company organized in
the form of a company limited by shares.
Article 316-2
Where 90% or more of the outstanding shares of a subsidiary company is held
by its controlling company, the controlling company may merge/consolidate
with the said subsidiary company upon a resolution to be adopted separately
at a meeting of the board of directors of both the controlling company and
the subsidiary company by a majority vote of the directors present at the
meeting of board of directors attended by directors representing two-thirds
of the directors of the respective companies; and the resolutions of
merger/consolidation so adopted shall be exempt from the application
of the provisions set out in Paragraphs I through III, Article 216 of
this Act governing the resolutions of Shareholders' meeting.
After adoption of the resolution by the board of directors of the subsidiary
company under the preceding Paragraph, a notice shall be given to each
of its shareholders and shall state therein that any shareholder who has
an objection against that resolution may, within 30 days or a longer period,
submit a written objection requesting the subsidiary company to redeem,
at a fair price, the shares of the subsidiary company he holds.
Where the share redemption price is to be decided by an agreement to be
reached through negotiation between the subsidiary company and its shareholders
under the preceding Paragraph, the subsidiary company shall, within 90 days
from the date of adoption of the resolution by the board of directors, effect
the payment of the redemption price; whereas, if no agreement on the redemption
price is adopted in the foregoing negotiation within 60 days from the date of
adoption of the said resolution by the board of directors, the shareholders
shall, within 30 days after such 60-day period, apply to the court for its
decision on the redemption price by a court ruling.
The request of a shareholder for redemption of shares by the subsidiary
company shall become mull and void, if the merger/consolidation resolution
is cancelled by the subsidiary company. This clause shall also apply to the
case where the shareholder fails to make the requests within the time limit
set out in Paragraphs II and III under this Article.
The provisions of Article 317 governing redemption shares held by an
objecting shareholder shall not apply the controlling company.
Where the Articles of Incorporation of the controlling company need to be
amended after completion of the merger/consolidation project, the provisions
of Article 277 hereof shall govern.
Article 317
When a company is split up or to be consolidated or merged with another
company, the Board of Directors shall draft a split-up plan or a contract of
consolidation or merger in respect of the matters related to such company
split-up plan or the consolidation or merger contract and shall submit
the same to a meeting of shareholders. Any shareholder who has expressed
his dissension, in writing or verbally with a record before or during
the meeting, may waive his voting right and request the company to buy back,
shares of the split and consolidated or merged company he holds at the
prevailing fair price.
In case the another company referred to in the preceding Paragraph is a
newly incorporated company, then the meeting of shareholders of the split
company shall be regarded as the promoters meeting of the said another
company, and election of the directors and supervisors of such new company
may be conducted at that meeting.
The provisions of Article 187 and Article 188 of this Act shall apply,
mutatis mutandis, to the circumstance specified in the preceding Paragraph.
Article 317-1
The contract of consolidation or merger, as mentioned in Paragraph 1 of
the preceding article, shall be made in writing setting forth the following
particular:
1.The name of the consolidated or merged company and, after the
consolidation or merger, the name of the surviving company or the
newly incorporated company;
2.Total number of shares, kinds of shares and amounts of each kind issued
by the surviving company or newly incorporated company as a result of the
consolidation or merger;
3.Where shares are to be issued to shareholders of the dissolved company
by the surviving company or newly incorporated company as a result of
consolidation or merger, the total number of new shares, kinds of shares
and amount of each kind, method of distribution, together with other
relevant matters;
4.The relevant provision applicable if the amount of shares to be issued
to shareholders of the dissolved company after consolidation or merger
is less than the value of one share and payable in cash;
5.The Articles of Incorporation of a surviving company must be modified
or altered, or that of a newly incorporated company to be executed, in
accordance with Article 129.
The aforesaid contract of consolidation or merger shall be sent to
shareholders together with the notice to convene a meeting of shareholders
for approval of the resolution to be adopted for consolidation or merger.
Article 317-2
The company split-up plan according to Paragraph I, Article 317 shall be reduced
to writing and contain the following particulars:
1.The changes/alterations need to be made in the Articles of Incorporation
of the existing company succeeding the business of the split company, or the
full text of the Articles of Incorporation;
2.The value of the business, the assets and the liabilities of the split company,
and the share swap ratio and calculation basis;
3.The total number, categories, and the number in each category of the new shares
to be issued by the existing company succeeding the business of the split company
or to be issued by the new company to be incorporated;
4.The total number, categories, and the number of share in each category of
the shares to be acquired by the split company or its shareholders;
5.Where the fractional share to be distributed to the split company or its
shareholder is to be paid in cash, the relevant provisions governing the process
thereof;
6.The rights and obligations of the split company to be succeeded by the existing
company or by the new company to be incorporated, and the mattes in connection
therewith;
7.Where the capital stock of the split company is reduced, the matters in
connection with such capital reduction;
8.The matters which shall be settled in the cancellation of the shares of the
split company; and
9.Where the company split-up plan is to be carried out jointly by a company and
another company, the resolutions of company split-up to be adopted by both
companies shall contain the matters pertaining to such joint splitting arrangement.
The company split-up plan as required in the preceding Paragraph shall be
disseminated to all shareholders along with the notice of meeting of shareholders
which is convened for a resolution on the approval of the company split-up plan.
Article 317-3
(Deleted)
Article 318
After consolidation or merger of a company, the Board of Directors of the
surviving company or promoters of the new company shall, after having completed
the procedure of serving follow-up notice to creditors and, in case there are
shares consolidated as a result of the consolidation or merger transaction,
after such consolidation becomes effective or, in the case where shares are not
suitable for consolidation, after such shares are disposed of, take the following
appropriate procedures respectively as the case may be:
1.The surviving company shall at once convene a meeting of the shareholders after
consolidation or merger and report on matters of consolidation or merger and,
in case of any necessity to modify or alter the Articles of Incorporation, shall
also modify or alter the Articles of Incorporation;
2.The newly incorporated company shall at once convene a meeting of promoters and
draw up the Articles of Incorporation.
The provisions set out in the Articles of Incorporation drawn up under the
preceding Paragraph shall not contravene any of the provisions set out in the
contract of consolidation or merger.
Article 319
The provisions of Article 73 to 75 shall apply, mutatis mutandis, to the
merger/consolidation or split-up of a company limited by shares.
Article 319-1
The surviving company or the new company to be incorporated and succeeding the
business of the split company after the company split-up transaction shall, to
the extent not exceeding the capital fund contributed by it in respect of the
business succeeded by it, assume the joint and several responsibility of
discharging the liabilities incurred by the split company prior to the split-up
transaction. However, the creditors' right to claim for the performance of the
joint and several responsibility of discharging the foregoing liabilities
shall become extinguished, if not exercised by the creditors within two year
from the date of reference day of the company split-up transaction.
Article 320
(Deleted)
Article 321
(Deleted)
Section 12.Liquidation
Subsection 1.Ordinary Liquidation
Article 322
In case of liquidation of a company, the directors shall become its liquidators,
unless otherwise provided for in this Act or in the Articles of Incorporation or
where other persons are appointed by a meeting of shareholders.
If no liquidator can be determined pursuant to the aforesaid provisions, the
court may appoint a liquidator upon the application of any interested person.
Article 323
A liquidator, with the exception of one appointed by the court, may be removed
from office by a resolution adopted at a meeting of shareholders.
The court may remove the liquidator upon the application of a supervisor or of
shareholders who have been continuously holding more than three percent of the
total number of issued shares for a period of one year or more.
Article 324
A liquidator, within the scope of his functions in liquidation, shall have
the same rights and obligations as the directors, unless otherwise provided for
in this section.
Article 325
The remuneration of a liquidator not appointed by the court shall be determined
by a meeting of shareholders, and the remuneration of a liquidator appointed by
the court shall be decided by the court.
Liquidation expenses and the remuneration of liquidators shall be immediately
paid for from the available assets of the company.
Article 326
The liquidator shall, after having assumed office, examine the financial condition
of the company, prepare the financial statements inventory of property, send them
to the supervisors for examination, and shall, after such reports, financial
statements and inventory of property have been ratified by the meeting of
shareholders, submit the same to the court.
The aforesaid statements and records of accounts shall be sent to the supervisors
for examination no later than ten days before the date of the meeting of shareholders.
Persons who hinder, refuse or evade the examination conducted by the liquidators
under the provisions of Paragraph I of this Article shall be severally subject to
a fine not less than NT$ 20,000 but not more than NT$ 100,000.
Article 327
The liquidator after having assumed office, by means of public notice shall, at
least three times, urge the creditors to declare their rights of claims within
a period of three months, stating also that any creditor failing to declare his
rights of claims within the period will not be included in the liquidation, unless
the creditor is known to the liquidator, to each known creditor the liquidator
shall notify respectively.
Article 328
The liquidator shall not effect performance in favor of any of the creditors
during the period fixed for declaring their rights of claims as provided in
the preceding article, unless the obligation is a secured one and approval
has been obtained from the court for repayment.
To the aforesaid unpaid creditors, the company shall, notwithstanding the
provisions of the preceding paragraph1, be liable in damages as may be caused
by delay.
In case the assets of the company are apparently sufficient to pay its debts,
the aforesaid creditors who may hold the company liable in damage may be
first paid with the approval of the court.
Article 329
Creditors who have been excluded from the liquidation may demand performance
out of the undivided residual assets of the company; however, this shall
not apply where such residual assets have been distributed in accordance
with Article 330 and a part of them or the whole has been taken.
Article 330
After the payment of debts, the residual assets shall be distributed among
the shareholders in proportion to the number of their shares; however1,
in the event that the company has issued special shares and it is otherwise
provided for in the Articles of Incorporation, such provisions shall be followed.
Article 331
The liquidator shall, within fifteen days after completion of liquidation,
prepare an income and expenditure statement, and a statement of profit and
loss, and shall forward the same together with all statements and records
of accounts to the supervisors for examination and subsequently submit them
to the meeting of shareholders for its ratification.
The meeting of shareholders may appoint another inspector to examine whether
the aforesaid statements and records of accounts are in order.
After the statements and records of accounts have been ratified by the meeting
of shareholders, they shall be deemed that the company has released the
liquidators of their responsibility, except for the responsibility for any
unlawful act which has done by the liquidators.
The income and expenditure statement and the statement of profit and loss
referred to in Paragraph 1 shall be filed with the court within fifteen days
after the approval thereof at the shareholders' meeting.
A liquidator who fails to complete the filing within the given time limit
as set forth in the proceeding Paragraph shall be liable for a fine of not
less than NT$ 10,000 but not more than NT$ 50,000.
Any person who hinders, refuses or evades the examination referred to
in Paragraph II above shall be liable for a fine of not less than NT$ 20,000
but not more than NT$ 100,000.
Article 332
The company shall keep all statements, records of account and documents for
a period of ten years from the date of filing a record with the court after
the completion of liquidation, and the custodian thereof shall be appointed
by the court upon application of the liquidator and other interested persons.
Article 333
If there are assets to be distributed after the completion of liquidation the
court may, upon application of interested persons, appoint a liquidator to
redistribute such assets.
Article 334
The provisions of Article 83 to 86, Article 87, Paragraph 3 and 4, Article 89
and Article 90 shall apply mutatis mutandis to liquidation of a company limited
by shares.
Subsection 2.Special Liquidation
Article 335
Where circumstances exist which apparently impede the execution of liquidation,
the court may, upon the application of any creditor or liquidator or shareholder
or ex officio, order the company to institute a process of special liquidation. The
same shall apply where there is suspicion that the liabilities of the company
exceed assets; but in such a case, only the liquidators may file an application.
Provisions concerning the suspension of procedures of bankruptcy, composition and
compulsory execution as specified in Article 294 shall apply mutatis mutandis to
the special liquidation.
Article 336
The court may, prior to the order to institute a process of special liquidation
upon the application of any of the persons specified in the preceding article
or ex officio, first effect any of the dispositions mentioned in Article 339.
Article 337
Whenever any important reason exists, the court may remove a liquidator.
In case of any vacancy among the liquidators or necessity to increase the
number of liquidators, the court shall appoint a liquidator.
Article 338
The court may, at any time, order liquidators to report on the business of
liquidation and on the state of the property, and may also make any investigation
necessary for the supervision of the liquidation.
Article 339
Whenever the court deems necessary for the supervision of the liquidation,
it may effect any of the dispositions mentioned in Article 354, Paragraph 1,
Item 1, 2 or 6.
Article 340
The company shall discharge its obligations in proportion to the amount of
creditors; however, this shall not apply to credits with preferential right
of performance or right of exclusion in accordance with law.
Article 341
Whenever it is deemed necessary, the liquidators may, during the process of
liquidation, convene a meeting of creditors.
Creditors having rights of claim representing not less than ten percent of
the total amount of credits known to the company may request the liquidators
to convene a meeting of creditors by filing a written application, stating
therein the reasons for convening such a meeting.
The provisions of Article 173, Paragraph 2 shall apply mutatis mutandis
to the circumstance specified in the aforesaid paragraph.
The rights of claim of creditors mentioned in the proviso to the preceding
article shall not be included in the total amount of credits mentioned
in Paragraph 2 hereof.
Article 342
The convener of the meeting of creditors may invite creditors with rights
of claims mentioned in the preceding article, paragraph 4, to be present
at the meeting of creditors to express opinions with no right to vote.
Article 343
The provisions of Paragraphs Two and Four
of Article 172, Paragraphs One to Five of Article 183, Paragraph Two
of Article 298; and Article 123 of the Bankruptcy Law shall apply mutatis
mutandis to special liquidation.
The convener of the creditors' meeting who violates Paragraph Two
of Article 172 as applied mutatis mutandis in the preceding paragraph,
or Paragraphs One, Four or Five of Article 183 as applied mutatis mutandis
in the preceding paragraph shall be imposed with a fine of not less
than NT$10,000 but not more than NT$50,000.
Article 344
The liquidators shall draw up a report on their investigation in the
state of the company's business and property, a balance sheet and an
inventory of the company, and bring up at the meeting of creditors
and shall also state their opinion on the policy for carrying out the
liquidation and pre-determined matters.
Article 345
The meeting of creditors may, by resolution, appoint a liquidation
inspector and may remove him at any time.
The aforesaid resolution shall have the approval of the court.
Article 346
In doing any of the following acts, the liquidators shall obtain the consent
of the liquidation inspector and, if the liquidation inspector does not give
consent, they shall convene a meeting of creditors to resolve on the matters;
however, this shall not apply if the value involved is not more than one-tenth
of one per cent of the total value of assets:
1.Disposal of any property of the company;
2.Borrowing of money;
3.Bringing of an action;
4.Agreement to compromise or seek arbitration; or
5.Relinquishment of any right.
If, in a case where a resolution of a meeting of creditors is required, there
exist urgent circumstances, the liquidators may, with the permission of the court,
do any of the acts mentioned in the preceding paragraph.
A liquidator who acts in contravention of the provisions of the preceding
two paragraphs shall be jointly liable with the company to a bona fide third party.
The provisions of the proviso to Article 84 paragraph 2 shall not apply to
special liquidation.
Article 347
The liquidators may consult the opinion of the liquidation inspector and make
a proposal for an agreement of settlement to the meeting of creditors.
Article 348
The terms of an agreement of settlement shall be equal among the creditors;
however, this shall not apply to the rights of claim of creditors mentioned
in the proviso to Article 340.
Article 349
When it is deemed necessary for the preparation of a draft for an agreement
of settlement, the liquidators may request the creditors mentioned in the
proviso to Article 340 to participate.
Article 350
An agreement of settlement shall be adopted by the concurrence of the creditors
holding three-fourths or more of the total amount of claims with rights to vote
at a meeting attended by over one half of the creditors entitled to vote.
The aforesaid resolution shall be approved by the court.
The provisions of Article 136 of the Bankruptcy Law shall apply mutatis mutandis
to the agreement of settlement mentioned in Paragraph 1.
Article 351
When it is necessary for carrying out an agreement of settlement, the terms of
such agreement may be modified or altered, in which case, the provisions of the
preceding four articles shall apply mutatis mutandis.
Article 352
When it is deemed necessary in view of the state of the company's property,
the court may order inspection of the company's business and property upon the
application of liquidators, the liquidation inspector, shareholders who have
been holding three per cent or more of the total number of issued shares
continuously for a period of six months or more, creditors who have filed an
application for special liquidation, or creditors who have rights of claim
representing not less than ten per cent of the total a mount of credits known
to the company or of its own motion.
The provisions of Articles 285 shall apply mutatis mutandis to the
circumstance mentioned in the preceding paragraph.
Article 353
The inspector shall report to the court the following matters in consequence
of the inspection:
1.Whether there have been any incidents for which any promoter, director,
supervisor, managerial officer or liquidator should be responsible under
Article 34, Article 148, Article 155, Article 193 or Article 224;
2.Whether a measure to preserve the property of the company is necessary; and
3.Whether it is necessary to employ a measure of preservation on the property
of any promoter, director, supervisor, managerial officer or liquidator, for
the exercise of any claim for damage by the company.
Article 354
When it is deemed necessary, the court may, on the basis of the report mentioned
in the preceding article, effect any of the following dispositions:
1.Measures of preservation on the property of the company;
2.Prohibition against transfer of registered shares;
3.Prohibition against release of the responsibilities of any of the promoters,
directors, supervisors, managerial officers or liquidators;
4.Annulment of the release of the responsibilities of any of the Promoters,
directors, supervisors, managerial officers or liquidators; this, however,
shall not apply to any release effected one year prior to the institution of
the special liquidation other than for any illegal purpose;
5.Assessment of any claim for damages arising from the responsibilities of
any of the promoters, directors, supervisors, managerial officers or
liquidators; and
6.Measures of preservation on the property of any of the promoters, directors,
managerial officers or liquidators on account of any claim for damages mentioned
in the preceding item.
Article 355
If, in cases where an order for the institution of a process of special
liquidation has been made, there is no prospect of reaching an agreement of
settlement, the court shall ex officio make an adjudication of bankruptcy in
accordance with the Bankruptcy Law. The same shall apply where there is no
prospect of an agreement of settlement being duly carried out.
Article 356
The provisions pertaining to ordinary liquidation shall apply mutatis mutandis
to matters in special liquidation if not provided for in this sub-section.
Section 13 Close Company
Article 356-1
A close company is a non public offering company whose shares shall be held
by not more than 50 persons, and whose Articles of Incorporation shall impose
restrictions on transfer of shares of a company.
The central competent authority shall as necessary in view of the socio-economic
situation and the actual needs increase the number of shareholders referred to in
the preceding Paragraph; the method of calculation and scope of qualification of
the shareholders shall be prescribed by the central competent authority.
Article 356-2
A close company shall explicitly describe its nature of "closeness" in its
Articles of Incorporation and the central competent authority shall make such
a nature public on its information website.
Article 356-3
A close company shall be formed by the agreement of all promoters and the
promoters shall fully subscribe in the first issue of the total number of shares.
Equity capital to be contributed other than cash by the promoters may be in the
form of assets required in the business of a close company , technical know-how,
or service, provided, however, that equity capital to be contributed by service
shall not exceed a certain percentage of the total shares issued by a close company.
The certain percentage set forth in the preceding Paragraph shall be prescribed
by the central competent authority.
Equity capital to be contributed by technical know-how or service shall be
agreed by all shareholders, and the kinds, amount of such capital contribution
and the number of shares allotted to the subscriber by a close company shall
be explicitly described in its Articles of Incorporation; the competent authority
shall register such particulars in accordance with the Articles of Incorporation
and shall make such particulars public on its information website.
The provisions of Article 198 shall apply mutatis mutandis to the election
of directors and supervisors by the promoters in a close company , unless
otherwise provided for in the Articles of Incorporation.
Articles of 132 through 149 and Articles 151 through 153 shall not apply to
the formation of a close company.
The provision of Article 198 shall apply to the election of directors and
supervisors in the shareholders' meeting of a close company, unless otherwise
provided for in the Articles of Incorporation.
Article 356-4
A close company shall make no public offering of any of its securities,
provided, however, that this provision shall not apply to the crowd-funding
portal operated by securities businesses approved by the competent authority
in charge of securities affairs.
The proviso to the preceding Paragraph shall still be subject to the restrictions
on the number of shareholders and transfer of shares imposed by the Articles
of Incorporation set forth in Article 356-1.
Article 356-5
The restrictions on transfer of shares shall be explicitly described in
the Articles of Incorporation of a close company.
The restrictions on transfer of shares set forth in the preceding Paragraph
shall be conspicuously annotated on a close company ’s printed share
certificates; if a company does not issue shares, an assignor shall state
such restrictions on the relevant written documentation delivered to the assignee.
The assignee referred to in the preceding Paragraph may request the company
to deliver a copy of its Articles of Incorporation.
Article 356-6
(Deleted)
Article 356-7
Where a close company is to issue special shares, it shall include in
its Articles of Incorporation provisions concerning:
1.Order, fixed amount or fixed ratio of allocation of dividends and bonus
on special shares;
2.Order, fixed amount or fixed ratio of allocation of surplus assets of the company;
3.Order of or restriction on, no voting right, multiple voting right, or veto power
over specific matters on the exercise of voting power by special shareholders;
4.Any prohibition or restriction regarding special shareholders’ rights of being
elected as directors and/or supervisors or rights of electing a certain amount of
seats of directors and supervisors;
5.Number, method or formula for special shares to be converted into common shares;
6.Restrictions on transfer of special shares; and
7.Other matters concerning rights and obligations incidental to special shares.
Paragraph Two of Article 157 shall not apply to multiple voting rights of special
shareholders as set forth in Item Three of the preceding paragraph.
Article 356-8
A close company may explicitly provide in its Articles of Incorporation that its
shareholders' meeting can be held by means of visual communication network or other
methods promulgated by the central competent authority.
In case a shareholders' meeting is proceeded via visual communication network,
then the shareholders taking part in such a visual communication meeting shall
be deemed to have attended the meeting in person.
A close company may explicitly provide in its Articles of Incorporation that if
it is agreed by all its shareholders, any action to be taken at a shareholders'
meeting may be taken, without a meeting, by written consents to exercise their
voting power.
A shareholders' meeting held in accordance with the preceding Paragraph shall
be deemed to have been convened; the shareholders who exercise their voting
power by written consents shall be deemed to have attend the meeting in person.
Article 356-9
Shareholders of a close company may reach a voting agreement in writing to
jointly exercise their voting rights or may form a voting trust where the
voting trustee will exercise the voting power based upon the terms and
conditions stated in such a written voting trust agreement.
The trustee referred to in the preceding Paragraph shall be a shareholder
unless otherwise provided for in its Articles of Incorporation.
A voting trust cannot be set up as a defense against the close company unless
the written voting trust agreement referred to in the first Paragraph, the name
or title, office, residence or domicile of each shareholder, and the total
number, kind and amount of shares transferred to the voting trust have been
delivered to the company for registration 30 days prior to a regular
shareholders’ meeting or 15 days prior to a special shareholders' meeting.
Article 356-10
(Deleted)
Article 356-11
A private placement of corporate bonds by a close company shall be adopted by
a majority of directors at a meeting attended by two-thirds or more of the total
number of directors.
A private placement of convertible corporate bonds or corporate bonds with
warrants by a close company shall be adopted by both the resolution of a meeting
of board of directors set forth in the preceding Paragraph and the resolution of
a shareholders’ meeting, provided, however, if the provisions of its Articles
of Incorporation require no resolution of a shareholders’ meeting, such provisions
shall govern.
The restrictions on number of shareholders and transfer of shares imposed by
the Articles of Incorporation set forth in Article 356-1shall still apply
after the holders of corporate bonds exercising their conversion rights or warrants.
The provisions of Article 246, Article 247, Paragraph 1 and Paragraphs 4
through 7 of Article 248, Article 248-1, Articles 251 through 255, Article 257-2,
Article 259, and Paragraph 1 of Article 257 regarding certification of corporate
bonds shall not apply to the issuance of corporate bonds provided in Paragraph 1
and Paragraph 2 of this Article.
Article 356-12
The issuance of new shares of a close company shall be adopted by a majority
of directors at a meeting attended by two-thirds or more of the total number
of directors, unless otherwise provided for in its Articles of Incorporation.
Paragraphs 2 through 4 of Article 356-3 shall apply mutatis mutandis to the
contribution of equity capital for subscribing new shares. In addition, such
contribution can also be made in the form of monetary credit extended to the
close company .
Article 267 shall not apply to the issuance of new shares referred to
in Paragraph 1 of this Article.
Article 356-13
A close company may voluntarily change its status into a non close company
by a resolution adopted, at a shareholders’ meeting, by a majority of the
shareholders present who represent two-thirds or more of the total number
of its outstanding shares.
Where stricter criteria for the total number of attending shareholders and
for the number of votes required to adopt a resolution at a shareholders’
meeting referred to in the preceding Paragraph are specified in the Articles
of Incorporation of a close company, such stricter criteria shall govern.
In any event that a close company fails to meet the requirements set forth
in Article 356-1, the company shall change its status into a non close company
and shall apply for a necessary alteration registration in respect of such
change accordingly.
If a close company fails to apply for an alteration registration in accordance
with the preceding Paragraph, the competent authority may order it to
rectify such violation within a given time limit and impose successively
in each case a fine based on Paragraph Five of Article 387; where the violation
is of a severe nature, the competent authority may, ex officio, order the
dissolution of a company.
Article 356-14
A non public offering company may change its status into a close company by
the unanimous consent of its shareholders.
After the unanimous consent of its shareholders provided in the preceding
Paragraph, the company shall immediately notify each of its creditors and
make a public announcement.
CHAPTER VI (Deleted)
Article 357
(Deleted)
Article 358
(Deleted)
Article 359
(Deleted)
Article 360
(Deleted)
Article 361
(Deleted)
Article 362
(Deleted)
Article 363
(Deleted)
Article 364
(Deleted)
Article 365
(Deleted)
Article 366
(Deleted)
Article 367
(Deleted)
Article 368
(Deleted)
Article 369
(Deleted)
CHAPTER VI-I Affiliated Enterprises
Article 369-1
The term "affiliated enterprises" as used in this Act shall refer to enterprises
which are independent in existence but are interrelated in either of the following
relations:
1.Companies having controlling and subordinate relation between them; or
2.Companies having made investment in each other.
Article 369-2
A company which holds a majority of the total number of the outstanding voting
shares or the total amount of the capital stock of another company is considered
the controlling company, while the said another company is considered the
subordinate company.
In addition to the relation set forth in the preceding Paragraph, if a company
has a direct or indirect control over the management of the personnel, financial
or business operation of another company, it is also considered the controlling
company, and the said another company is considered the subordinate company.
Article 369-3
Under any of the following circumstances, it shall be concluded as the existence
of the controlling and subordinate relation:
1.Where a majority of executive shareholders or directors in a company are
contemporarily acting as executive shareholders or directors in another company; or
2.Where a majority of the total number of outstanding voting shares or the total
amount of the capital stock of a company and another company are held by the
same shareholders.
Article 369-4
In case a controlling company has caused its subsidiary company to conduct
any business which is contrary to normal business practice or not profitable,
but fails to pay an appropriate compensation upon the end of the fiscal year
involved, and thus causing the subsidiary company to suffer damages, the
controlling company shall be liable for such damages.
If the responsible person of the controlling company has caused the subsidiary
company to conduct the business described in the preceding Paragraph, he/she
shall be liable, jointly and severally, with the controlling company for such damages.
In the event the controlling company fails to make the indemnification as
required in the preceding Paragraph, the subsidiary company's creditor, or the
shareholder(s) who hold(s) one per cent(1%) or more of the total number of the
outstanding voting shares or of the total amount of the capital stock of the
subsidiary company may exercise, in its (or his/their) own name, the rights of
the subsidiary company as set forth in the preceding two Paragraphs to claim
for the payment of the indemnity from the controlling company to the subsidiary
company.
The right to exercise the claim under the preceding Paragraph shall not be
prejudiced by a settlement entered into or a waiver made by the subsidiary
company, if any, in respect of such right to claim for damages.
Article 369-5
In the event the business operation conducted by a subordinate company of a
controlling company under the provisions of Paragraph I of the preceding Article
has caused another subordinate company of the same controlling company to gain
profit, then the benefited subordinate company shall, within the limit of the
profit it has gained, be liable, jointly and severally with the controlling
company, for the indemnification obligation set out in the preceding Paragraph.
Article 369-6
The right to claim for damages set out in the preceding two Articles shall
be extinguished if not exercised within two years from the date when the
claimant is aware of the existence of the indemnification obligation of
the controlling company and the existence of indemnifier, or within five
years from the date of occurrence of the indemnification liability of the
controlling company.
Article 369-7
In case a controlling company has caused, directly or indirectly, its
subordinate company to conduct any business which is contrary to normal
business practice or not profitable, and if the controlling company has a
claim upon said subordinate company, then the controlling company shall
not claim for offsetting such claim against its indemnification liability,
if any, to the subordinate company.
In case the subordinate company enters into bankruptcy or composition
procedures in accordance with the provisions of the Bankruptcy Law, or
enters into the process of reorganization or special liquidation of its
company in accordance with the provisions of this Act, the claim set forth
in the preceding Paragraph, with or without the right to exclusion or
priority, shall be satisfied in the order second to all other obligatory
claims of the subordinate company.
Article 369-8
In case a company holds one third or more of the total number of the
voting shares or of the total amount of the capital stock of another
company, a notice in writing shall be given to such another company within
one month from the date of occurrence of such event.
In case any of the following changes is made afterwards in the particulars
contained in the notice given by a company in accordance with the provisions
of the preceding Paragraph, a further notice shall be given within five days
from the date of occurrence of such change:
1.Where its holdings in the voting shares or in the equity capital of another
company becomes less than one third of the total number of the voting shares
or the total amount of the capital stock of the said another company;
2.Where its holdings in the voting shares or in the equity capital of another
company exceeds one half (1/2) of the total number of the voting shares of
the total amount or the capital stock of the said another company; or
3.Where its holdings in the voting shares or in the equity capital of another
company as described in the preceding Item has reduced again to a level below
the total number of the voting shares or the total amount of the capital stock
of the said another company.
The notified company shall, within five days after its receipt of the notice
given under either of the preceding two Paragraphs, make a public notice
stating therein the name of the notifying company and the number of shares
held and the amount of capital contribution made by the notifying Company.
In case the responsible person of a company failed to give a notice or to
make a public notice as required in any of the three preceding Paragraphs,
he/she shall be imposed with a fine in an amount of not less than NT$6,000
but not more than NT$30,000. In addition, the competent authority shall
order the violator to give the notice or to make the public notice within
a given time limit. If the violator further fails to do so after expiry of
the given time limit, the competent authority may fix another time limit
for the violator to complete the notification procedure, and may impose
successively upon the violator a fine in an amount of not less than NT$9,000
but not more than NT$60,000 for each time of noncompliance by the violator
until the notification requirement is duly complied with by the violator.
Article 369-9
Where a company and another company have made investment in each other's company to
the extent that one third or more of the total number of the voting shares or the
total amount of the capital stock of both companies are held or contributed by
each other, these two companies are defined as mutual investment companies.
Where both mutual companies are holding one half or more of the total number of
the voting shares or of the total amount of the equity capital of each other's
company, or having direct or indirect control over the management of the personnel,
financial of business operations of each other's company, they shall have the status
of the controlling company as well as the subordinate company to each other's company.
Article 369-10
Subject to the condition that the fact of mutual investment is known to both mutual
investment companies, the number of voting power exercisable by either investing company
in the invested company shall not exceed one third of the total number of the outstanding
voting shares or one third of the total amount of the equity capital of the invested
company provided, however, that the voting power associated with the dividend shares
distributed from capitalization of surplus earnings or excess legal reserve shall
still be exercisable.
In case a company has not received a similar notice from another company after having
given a notice such another company in accordance with the provisions of Article 369-8
of this Act nor does it know the existence of mutual investment relation between them,
then its right to exercise the voting power in the capacity of a shareholder of such
another company shall be free from the restriction set forth in the preceding Paragraph.
Article 369-11
In calculating the number of shares or the amount of equity capital of another company
being held by a company under this Chapter, the following shares or equity capital shall
also be included into the calculation:
1.The shares or equity capital of another company being held by the subordinate company
of companies of the investing company;
2.The shares or equity capital (of such another company) being held by a third party
for the investing company; and
3.The shares or equity capital (of such another company) being held by a third party
for any subordinate company of the investing company.
Article 369-12
A subsidiary company which publicly issues shares shall, at the end of each fiscal year,
prepare and submit a report regarding the relationship between itself and its controlling
company indicating therein the legal acts, funds flow and loss and profit status
between the two companies.
A controlling company which publicly issues shares shall, at the end of each fiscal year,
prepare for submission a consolidated business report and consolidated financial statements
of the affiliated enterprises involved.
The rules for preparation of the reports and statements as required in the preceding
two Paragraphs shall be prescribed by the competent authority in charge of securities affairs.
CHAPTER VII Foreign Company
Article 370
A foreign company which establishes its branch office in the territory of Republic
of China shall translate its name into Chinese and indicate the class to which it belongs
as well as its nationality.
Article 371
A foreign company without making branch office registration may not conduct its business
operation in the name of a foreign company in the territory of the Republic of China.
A person who violates the provision set out in the preceding paragraph shall be punished
with imprisonment for a period of not more than one year, detention, or in lieu thereof
or in addition thereto a fine of not more than NT$ 150,000 and shall assume on his own
the civil liabilities arising therefrom, or shall be jointly and severally liable therefor,
in case there are two or more violators. In addition, the company shall be enjoined
by the competent authority from using its foreign corporate name.
Article 372
A foreign company which establishes its branch office in the territory of
the Republic of China shall appropriate funds exclusively for its operation
of business therein and shall designate a representative to serve as its
responsible person in the territory of the Republic of China.
Where the responsible person of a foreign company in the territory of
the Republic of China refunds the funds under the preceding paragraph to
the foreign company or such funds are withdrawn by the foreign company at
will after the registration of the branch office, the responsible person
shall be punished with imprisonment for a term of not more than five years,
detention, or in lieu thereof or in addition thereto a fine in an amount
of not less than NT$ 500,000 but not more than NT$ 2,500,0000.
Under any of the circumstances set forth in the preceding paragraph, the
responsible person of a foreign company
in the territory of the Republic of China shall be liable, jointly and
severally with the foreign company, for the damages to be sustained by
the third party or parties therefrom.
Upon conviction of the punishment set out in Paragraph Two hereinabove,
the central competent authority shall cancel or nullify the registration
of that company; provided, however, that the provision set out in this
Paragraph shall not apply in case the unlawful act has been rectified by the
company before the judgment becomes final.
After the responsible person, agents, employees or other personnel of the
branch office of a foreign company have been convicted the crime of Offenses
of Forging Instruments or Seals in the Chapter of the Criminal Code in filing
an application for registration of its company incorporation or other
company alterations, the central competent authority shall, ex officio
or upon an application filed by an interested party, cancel or nullify
such registration of the said company.
Article 373
A foreign company shall not be registered as a branch office under any of
the following circumstances:
1.If its objective or business is in contrary to the law, public order or
good custom of the Republic of China; or
2.If any information or statement contained in the items or document of
registration application filed by it is found false.
Article 374
A foreign company which establishes its branch office in the territory of
the Republic of China shall keep a copy of its Articles of Incorporation in
the branch office. In case there are shareholders of unlimited liability,
a roster of such shareholders shall also be kept.
The responsible person of a foreign company in the territory of the Republic
of China who violates the provision set forth in the preceding paragraph shall
be subject to a fine of not less than NT$ 10,000 but not more than NT$ 50,000. Any
further failure of the same nature shall be imposed with a fine of not less
than NT$ 20,000 but not more than NT$ 100,000 for each successive failure.
Article 375
(Deleted)
Article 376
(Deleted)
Article 377
The provisions of Article 7, Article 12, Paragraph One of Article 13,
Articles 15 to 18, Paragraphs One to Four of Article 20, Paragraphs One
and Three of Article 21, Paragraph One of Article 22, and Articles 23 to 26-2
shall apply mutatis mutandis to a foreign company which establishes its
branch office in the territory of the Republic of China.
The responsible person of a foreign company in the territory of the Republic
of China who violates Paragraph One or Two of Article 20 as applied mutatis
mutandis in the preceding paragraph shall be imposed with a fine of not less
than NT$10,000 but not more than NT$50,000; such person who violates Paragraph
Four of Article 20 as applied mutatis mutandis in the preceding paragraph by
evading, impeding or refusing the examination or failing to make the submission
thereof after expiry of the deadline date shall be imposed with a fine of not
less than NT$20,000 but not more than NT$100,000.
The responsible person of a foreign company in the territory of the Republic
of China who violates Paragraph One of Article 21 as applied mutatis mutandis
in the Paragraph One by evading, impeding or refusing the examination shall be
imposed with a fine of not less than NT$20,000 but not more than NT$100,000. If the
examination is still evaded, impeded, or refused, a fine of not less than NT$40,000
but not more than NT$200,000 shall be imposed consecutively for each time
of non-compliance.
The responsible person of a foreign company in the territory of the Republic
of China who violates Paragraph One of Article 22 as applied mutatis mutandis
in the Paragraph One by refusing to present evidential documents, vouchers,
books and statements and other relevant information shall be imposed with
a fine of not less than NT$20,000 but not more than NT$100,000. Any further
refusal shall be imposed with a fine of not less than NT$ 40,000 but not
more than NT$ 200,000 for each successive refusal.
Article 378
A foreign company which establishes its branch office in the territory
of the Republic of China and which desires to cease conducting business therein,
shall apply to the competent authority for nullifying the registration of the
branch office; however it may not be exempted from any obligation and debt
incurred by it prior to the filing of such application.
Article 379
In any of the following events, the competent authority shall, ex officio or
upon an application filed by an interested party, nullify the branch office
registration of a foreign company in the territory of the Republic of China:
1.The foreign company has been dissolved;
2.The foreign company has been declared bankrupt; or
3.The branch office of a foreign company in the territory of the Republic
of China has satisfied one of the Items listed in Article 10.
The aforesaid nullification of the registration under the preceding paragraph
shall in no way impair the rights of creditors and the obligations of the
foreign company.
Article 380
A foreign company which cancels or nullifies all of its branch offices in
the Territory of the Republic of China shall complete liquidation of its
business within the territory of the Republic of China or right and obligation
incurred by its branch offices. Any outstanding obligation shall still be
discharged by such foreign company.
The aforesaid liquidation shall be undertaken, unless a liquidator is otherwise
designated by the foreign company, by the responsible person of the foreign
company within the territory of the Republic of China or the managerial officer
of its branch office. The provisions of this Act pertaining to the process
of liquidation applicable to different classes of companies shall apply mutatis
mutandis to such foreign companies according to their respective nature.
Article 381
The property of a foreign company within the territory of the Republic of China
shall not be moved out of the territory of the Republic of China during the
time of liquidation and shall not be disposed of except by the liquidator in
the execution of the liquidation.
Article 382
The responsible person, managerial officer of its branch office or the designated
liquidator of a foreign company within the territory of the Republic of China who
acts in contravention of the provisions of the two preceding articles shall be
jointly liable with such foreign company in respect of the transactions done
within the territory of the Republic of China or obligation contracted by its
branch office.
Article 383
(Deleted)
Article 384
(Deleted)
Article 385
(Deleted)
Article 386
A foreign company which, having no intention to set up a branch office to transact
business within the territory of the Republic of China, has not applied for branch
office registration, but designates a representative for establishing an
representative's office in the territory of the Republic of China, shall file a
registration application with the competent authority.
If a foreign company has no intention to continuously set up the representative's
office after the establishment of such office, it shall apply for nullification of
the registration with the competent authority.
If there is vacancy of the representative in the representative's office or the
office moves to an unknown place, the competent authority shall, ex officio, order
the foreign company to designate a representative or change the location of the
office within a certain time limit; if the foreign company still fails to do so
after expiry of the deadline date, the competent authority may nullify the
registration of the representative's office.
CHAPTER VIII Registration and Recognition of Companies
Section 1.Application
Article 387
Regulations governing the deadline date, the documents and statements submitted
and other relevant matters for various registration application under this Act
shall be prescribed by the central competent authority.
The registration application referred to in the preceding paragraph may be made
by the way of electronic transmission; regulations governing its implementation
shall be prescribed by the central competent authority.
An agent may be appointed for the application set out in the provisions of the
preceding two paragraphs and such agent shall be limited to a certified public
accountant or a lawyer.
The responsible person of a company or the responsible person of a foreign company
in the territory of the Republic of China who fails to file the application beyond
the appropriate deadline date specified in the regulations to be prescribed
under Paragraph One hereinabove shall be imposed with a fine of not less
than NT$ 10,000 but not more than NT$ 50,000.
Subject to the provision set out in Paragraph One hereinabove, the competent
authority shall further order the responsible person of a company or the
responsible person of a foreign company in the territory of the Republic of China
to rectify his law violating act within a given time limit; and if he fails to
take corrective action after expiry of the time limit, he shall be imposed with
a fine of not less than NT$ 20,000 but not more than NT$ 100,000 for each time
of non-compliance until the law violating act is rectified.
Article 388
In case various registration application filed is held by the competent authority
to be contrary to this Act or not in conformity with legal procedure, correction
of errors shall be ordered, and the registration will not be made until such
errors shall have been corrected.
Article 389
(Deleted)
Article 390
(Deleted)
Article 391
An applicant who is convinced after filing that there are errors or omissions in
matters stated, may apply for rectification of the same.
Article 392
The competent authority may issue certificates of matters contained in various
company registration.
Article 392-1
A company may apply for registration of corporate name in a foreign language to the
competent authority and the authority shall register such foreign name in accordance
with the foreign name indicated in the Articles of Incorporation.
The competent authority may, by application, under one of the following circumstances,
order a company to change its registration within a certain time limit, after the
foreign corporate name is registered in accordance with the provision of the preceding
paragraph; if the company fails to change its registration after expiry of
the given time limit, the competent authority shall cancel or nullify the registration
of the foreign name of that company:
1. A foreign corporate name is identical with the foreign name which is registered
or approved by pre-registration enquiry by another export/import firm prior to the
registration of such foreign corporate name under the trade regulations. This restriction
is also applicable in case the registration of such export/import firm has been canceled,
withdrawn or nullified for less than two years;
2. A foreign corporate name has been enjoined from using by a final court decision; or
3. A foreign corporate name is identical with the foreign name of a government agency
or public welfare organization.
The kinds of foreign languages set forth in Paragraph One shall be prescribed by
the central competent authority.
Article 393
The responsible person of a company or any interested person may, with reasons
stated, apply for an access to examine, transcribe or make copies of the contents
of various company registration records or documents in file; provided, however,
that the authority may refuse such application or may set up a limitation of the
information or data to be examined by the applicant, if necessary.
The following particulars of company registration shall be made open to the
public by the competent authority, and any person may apply to the competent
authority for an access to examine, transcribe or make copies thereof:
1.The name of the company; the foreign corporate name if it is indicated in
the Articles of Incorporation;
2.The scope of business of the company;
3.The location of the company; the location of branch office, if any;
4.The shareholder(s) executing the business operations or representing the company;
5.The name of directors and supervisors and their respective shareholdings in
the company;
6.The name of the manager;
7.The amount of authorized capital stock or of the paid-in capital;
8.Whether there are special shares with multiple voting right or veto power
over specific matters;
9.Whether there are special shares issued under Item Five, Paragraph One
of Article 157 or Item 4, Paragraph One of Article 356-7; or
10.The Articles of Incorporation of the company.
Any person may have the access to the information web site of the competent
authority to examine the information enumerated in Items 1 through 9 of the
preceding Paragraph; it is also applicable to Item 10, if agreed by the company.
Article 394
(Deleted)
Article 395
(Deleted)
Article 396
(Deleted)
Article 397
In case a company fails to file application for dissolution with the authority
after it has been dissolved, the authority may, ex officio or at the request
of any interested party, rescind its registration.
When executing the rescission of company registration under the preceding
Paragraph, the competent authority shall, in addition to requiring, by an order
or a ruling, the dissolution of the company, instruct the responsible person of
the company to file a statement of objection, if may, within a period of thirty
days. If no objection has been filed upon the lapse of the prescribed period or
if the objection is found not well grounded,its registration shall be rescinded,
Article 398
(Deleted)
Article 399
(Deleted)
Article 400
(Deleted)
Article 401
(Deleted)
Article 402
(Deleted)
Article 402-1
(Deleted)
Article 403
(Deleted)
Article 404
(Deleted)
Article 405
(Deleted)
Article 406
(Deleted)
Article 407
(Deleted)
Article 408
(Deleted)
Article 409
(Deleted)
Article 410
(Deleted)
Article 411
(Deleted)
Article 412
(Deleted)
Article 413
(Deleted)
Article 414
(Deleted)
Article 415
(Deleted)
Article 416
(Deleted)
Article 417
(Deleted)
Article 418
(Deleted)
Article 419
(Deleted)
Article 420
(Deleted)
Article 421
(Deleted)
Article 422
(Deleted)
Article 423
(Deleted)
Article 424
(Deleted)
Article 425
(Deleted)
Article 426
(Deleted)
Article 427
(Deleted)
Article 428
(Deleted)
Article 429
(Deleted)
Article 430
(Deleted)
Article 431
(Deleted)
Article 432
(Deleted)
Article 433
(Deleted)
Article 434
(Deleted)
Article 435
(Deleted)
Article 436
(Deleted)
Article 437
(Deleted)
Section 2.Fees
Article 438
Upon approving the various application filed by any person in accordance with
this Act for pre-registration enquiry, registration, examination, transcription
or making copy of company name and scope of business, or requesting for certification
of the company information registered, the competent authorities shall charge the
applicant an examination fee; regulations governing the items of fees, the amounts
of fees and other matters shall be prescribed by the central competent authority.
Article 439
(Deleted)
Article 440
(Deleted)
Article 441
(Deleted)
Article 442
(Deleted)
Article 443
(Deleted)
Article 444
(Deleted)
Article 445
(Deleted)
Article 446
(Deleted)
CHAPTER IX Supplemental Provisions
Article 447
(Deleted)
Article 447-1
Bearer shares issued by a company before the effectiveness of the amended
articles of this Act on July 6, 2018 shall still apply to the articles prior
to such effectiveness.
A company shall change the bearer shares set forth in the provision of the
preceding paragraph into registered shares when the holders of bearer shares
exercise their shareholders' rights.
Article 448
In case of any refusal to pay the fines specified in this Act, the case
shall be referred to compulsory execution in accordance with the law.
Article 449
This Act shall take effect from the date of promulgation thereof, except
for the effect date of the Article 373, Article 383 amended on June 25,
1997, Section 13 of Chapter 5 amended on July 1, 2015, Articles amended
on July 6, 2018 to be decided by the Executive Yuan,
and the articles amended on May 27, 2009 to be in force on November 23, 2009. |