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Company Act(2015.07.01) |
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Article 356-1
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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.
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Article 356-2
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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.
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Article 356-3
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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, service or goodwill, provided, however, that equity capital to be contributed by service or goodwill 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 other than cash 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 its Articles of Incorporation.
Articles of 132 through 149 and Articles 151 through 153 shall not apply to the formation of a close company .
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Article 356-4
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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.
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Article 356-5
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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 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.
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Article 356-6
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A close company shall choose either par value or no par value shares when issuing shares.
A close company issuing no par value shares shall explicitly describe it in its Articles of Incorporation; the payment for such no par value shares shall be fully set aside as equity capital with no application of Item 1, Paragraph 1 of Article 241.
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Article 356-7
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Where a close company is to issue special shares, it shall include in its Articles of Incorporation provisions concerning:
- Order, fixed amount or fixed ratio of allocation of dividends and bonus on special shares;
- Order, fixed amount or fixed ratio of allocation of surplus assets of the company ;
- 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;
- Any particulars regarding special shareholders' rights of being elected as directors and/or supervisors;
- Number, method or formula for special shares to be converted into common shares;
- Restrictions on transfer of special shares; and
- Other matters concerning rights and obligations incidental to special shares.
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Article 356-8
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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.
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Article 356-9
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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 five days prior to a shareholders' meeting.
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Article 356-10
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A close company may explicitly provide in its Articles of Incorporation to resolve the surplus earning distribution and/or loss offsetting after the close of each semi fiscal year.
The proposal of surplus earning distribution and/or loss offsetting after the close of each semi fiscal year, with the business report and financial statements audited by supervisors, shall be resolved by the meeting of board of directors.
When distributing surplus earning in accordance with the first Paragraph, a close company shall estimate and reserve the tax payable, cover its losses and set aside a legal reserve in accordance with the provisions of this Act. Where such legal reserve amounts to the total paid-in capital, this provision shall not apply.
When a close company has violated the provisions of the preceding Paragraph, its shareholders shall, to the extent that the surplus earning has distributed to them, be liable for the repayment of surplus earning to the company .
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Article 356-11
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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, Articles 251 through 255, Article 257-1, 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.
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Article 356-12
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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.
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Article 356-13
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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 7 of Article 387; where the violation is of a severe nature, the competent authority may, ex officio, order the dissolution of a company .
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Article 356-14
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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.
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Article 449
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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 amended on June 15, 2015 to be decided by the Executive Yuan, and the articles amended on May 5, 2009 to be in force on November 23, 2009.
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