By Hung Ou Yang
Since the amendment of the Taiwanese Company act is a huge change to the business environment, we, Brain Trust International Law firm, hereby continue to brief the amendment for foreign companies and investors who are investing in Taiwan or will consider to invest in Taiwan. This is the second article for the amendment of the Taiwanese company Act on July 6, 2018.
Director Liability
As many foreign companies or foreign investors set up their Taiwanese subsidiary by using figureheads who have Taiwanese nationalities so that some administrative regulations can be circumvented, they should be aware that any person who "substantially controls" the Taiwanese company shall be liable under Taiwanese laws exactly like a director. Section 3 of Article 8 of the Taiwanese Company Act now provides that any person who de facto controls over the management of the personnel, financial or business operation of the company, or de facto controls over the director, shall be liable for the same civil, criminal and administrative liabilities like a director, even if such person is not a registered director of the said company. After the amendment, Section 3 of Article 8 will be applied to all the companies regulated by the Taiwanese Company Act, no longer limited to the companies who have issued their shares in public.
Electronic Service
Article 28-1 provides that the Taiwanese government/competent authority may electronically serve the company any official document, which shall be served to the said company, for satisfying the due process requirement. It implicates that foreign investors may have to check their electronic communication system more often and pay much more attention to the notice written in Chinese and served electronically.
Manager Residency
According to Article 29, the manager of a Taiwanese company is no longer required to reside in Taiwan or have a domicile in Taiwan because of the global trend of conducting business internationally. This amendment shall be done a long time ago for the purpose of business.
A Company Limited by Shares
To establish "a company limited by shares" in Taiwan, it still requires at least two promoters. However, per Section 3 of Article 128, not only a company but also a "limited partnership" under the Taiwanese Limited Partnership Act can be qualified as a promoter. In addition, when "a company limited by shares" is established by a company as the only shareholder, the requirement of at least two promoters will not be applied. Moreover, Article 128-1 provides that "a company limited by shares" which has only one company shareholder may choose not to set up a board of directors and not to set up a supervisor. It means that the minimum three directors and one supervisor requirement will not be applied in such a case, and one director or two directors will be sufficient.
According to Article 156, now "a company limited by shares" may issue no par value stock. However, "a company limited by shares" may not issue partly no par value stock and partly par value stock. For consistency, it must be either par value stock or no par value stock. In this regard, Article 156-1 further provides for the procedures to change the current par value stock into no par value stock. Given that the companies which have issued their shares in public may involve multiple investors' interests, such companies cannot make such a change. In addition, for those companies which adopt no par value stock system, they cannot change it.
To avoid any possibility of money laundering, now Article 137 abolishes the bearer shares system.
Now, according to Article 131, the promoter for "a company limited by shares" may use the assets or the techniques needed by the said company to make the payment for the shares he has subscribed.
Shares
To avoid any possibility of money laundering, now Article 137 abolishes the bearer shares system.According Article 156, now "a company limited by shares" may issue no par value stock. However, "a company limited by shares" may not issue partly no par value stock and partly par value stock. For consistency, it must be either par value stock or no par value stock. In this regard, Article 156-1 further provides for the procedures to change the current par value stock into no par value stock. Given that the companies which have issued their shares in public may involve multiple investors' interests, such companies cannot make such change. In addition, for those companies which adopt no par value stock system, they cannot change it into par value stock system.
Hung Ou Yang, Esq. is the Managing Attorney of Brain Trust International Law Firm, and specializes in handling transnational legal disputes, business and white collar crime, business litigation, and the negotiation and drafting of international agreements. Hung Ou Yang has successfully resolved many high-profile civil, criminal, and transnational disputes, including a complaint concerning pesticide-contaminated land leased by RT-Mart, anti-dumping investigation in connection with CSC's carbon steel plate, and transnational property litigation concerning an internationally-renowned scholar. Hung Ou Yang also has a wealth of experience in domestic and overseas litigation and negotiations.
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