Taiwan Companies Act

(Articles 101 to 150)

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 not less than NT$ 10,000 but not more than NT$ 50,000. For successive refusals to make available the articles of incorporation as required, the amount of fine shall be increased to an amount not less than NT$ 20,000 but not more than NT$ 100,000 upon each successive refusal.

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. For successive refusals to make the shareholders roster available at the company, the amount of the fine shall be increased to not less than NT$ 20,000 but not more than NT$ 100,000 for each successive refusal.

Article 104
A company shall, after having been incorporated, issue certificates of amounts contributed setting forth the following particular:
1. The name of the company;
2. The date of incorporation;
3. The full name or title of the shareholder and the amount of his contribution to capital; and
4. The date of issue of the certificate of amount contributed.
The provisions of Article 162, Paragraph 2, proviso to Article 163, Paragraph 1 and Article 165 shall mutatis mutandis apply to certificates of amounts contributed.

Article 105
The certificate of capital contributions to be issued by the company shall be affixed with the signatures or personal seals of all shareholders.

Article 106
Increase of the amount of capital stock of a limited company shall be concurred in by a majority 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.
The shareholders of a limited company who disagree with the capital increase proposal set forth in the preceding Paragraph shall be deemed to be in agreement with the portion of amendment made in the Articles of Incorporation in respect to such capital increase.
Under the circumstance set forth in the proviso of Paragraph One of this Article, new shareholders may be allowed to join the company with an unanimous agreement of all existing shareholders.
Subject to an unanimous agreement of all shareholders, a limited company may effect a capital reduction project or convert its organization into a company limited by shares.

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 accept the debt owned by it prior to its change of organization.

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 all the shareholders. When there are several directors, one of them shall be designated, in the Articles of Incorporation, to act as the chairman of directors and to represent the company externally.
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 a majority (two thirds or more) 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 Article 211 of this Act shall apply mutatis mutandis to the directors of a limited company.

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.

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 send the same to each of the shareholder for their approval.
If no objection is raised by any shareholder over a period one month after the annual reports and financial statements referred to in the preceding Paragraph have been duly served to the shareholders, they shall be deemed to have been approved by all shareholders.
The provisions set out in Articles 231 through 233, Article 235, and Paragraph One of Article 245 of this Act shall apply mutatis mutandis to a limited company.

Article 111
A shareholder shall not, without the consent of a majority of all other shareholders, transfer all or part of his contribution to the capital of the company to another person or persons.
The shareholders who disagree with the transfer as mentioned in the preceding paragraph, 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 directors shall not, without the unanimous consent of all other shareholders, transfer all or part of their contribution to the capital of the company to another person or persons.
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 1 or Paragraph 3. 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 unanimous agreement of all shareholders, appropriate another sum as a special reserve.
Responsible persons of a company who fail to set aside a legal reserve in violation of the provisions in Paragraph 1, shall be severally subject to a fine not exceeding NT$60,000.

Article 113
For modification of Articles of Incorporation, consolidation or merger, dissolution and liquidation of a 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 goodwill or 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.

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 or with limited disposing capacity 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;
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 directors and supervisors of the company referred to in the preceding Paragraph 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. The total number of shares and the par value of each share certificate;
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 number of shares to be issued upon incorporation of the company, if the total authorized number of shares are to be issued in installments;
3. The cause(s) for dissolution of the company, if any:
4. The kind of special shares and the rights and obligations covered by such shares; and
5. 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 5 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.
The payment for shares as mentioned in the first paragraph may be made in assets required in 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 articles, 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;
5. In case special shares are issued, the total amount of such shares and the matters specified in various items of Article 157; and
6. In case bearer shares are issued, the total number of such shares.

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
The issue price of share certificates shall not be less than the par value thereof, unless otherwise provided for by the authority in charge of securities for the companies offering their respective share certificates to the public.

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 Article 172, Paragraphs 1, 3 and 6, Article 174 to 179, Article 181, and Article 183 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.

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 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.