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.
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| Article 2 | Companies are of four classes as set forth in the following:
- 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.
- 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.
- 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.
- 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.
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| 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.
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| 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, and authorized by the R.O.C. Government to transact business within the territory of the Republic of China.
A foreign company, within the limits prescribed by laws and regulations, is entitled with the same legal capacity as a R.O.C. company.
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| 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.
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| Article 6 | No company may be incorporated unless it has registered with the central competent authority.
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| 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.
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| 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.
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| 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.
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| 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:
- 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
- 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.
- 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.
- 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.
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| 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.
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| 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.
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| 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.
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| Article 14 | (Deleted)
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| 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:
- Where an inter-company or inter-firm business transaction calls for such lending arrangement; or
- 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| Article 24 | A dissolved company shall be liquidated, unless such dissolution is caused by consolidation or merger, split-up, or bankruptcy.
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| Article 25 | A dissolved company in the process of liquidation shall be deemed as not yet dissolved.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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:
- 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;
- In the case of a limited company, it shall be decided by a majority of voting shares of all shareholders;
- 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.
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| 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:
- 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;
- 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;
- 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;
- 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;
- Having been dishonored for unlawful use of credit instruments, and the term of such sanction has not expired yet; or
- Having no or only limited disposing capacity.
- Having been adjudicated of the commencement of assistantship and such assistantship having not been revoked yet.
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| 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.
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| 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.
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| 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.
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| 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.
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| Article 35 | (deleted)
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| 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.
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| Article 37 | (Deleted)
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| Article 38 | (Deleted)
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| Article 39 | (Deleted)
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