Taiwan Companies Act
(Articles 351 to 449)
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 amount 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.
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.
The 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 authority in charge of securities affairs.
CHAPTER VII Foreign Company
Article 370
The name of a foreign company shall be translated into Chinese and, in addition to the class to which it belongs, also indicate its nationality.
Article 371
A foreign company may not apply for recognition without making incorporation registration in its own country and conducting its business operation therein.
A foreign company may not transact business within the territory of the Republic of China without obtaining a certificate of recognition from the government of the Republic of China and completing the procedure for branch office registration.
Article 372
A foreign company that shall appropriate funds exclusively for its operation of business in the Republic of China shall be subject to the minimum requirement as may be specified by the authority of its capital in respect of its business.
A foreign company shall designate representative within the territory of the Republic of China to represent the company in all litigious and non-litigious matters and to serve as its responsible persons in the Republic of China.
Article 373
A foreign company shall not be recognized 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 application documents filed by it is found false.
Article 374
A foreign company shall, after its recognition, keep a copy of its Articles of Incorporation in the office of its representative for litigious and non-litigious matters or branch office within the territory of the Republic of China. In case there are shareholders of unlimited liability, a roster of such shareholders shall also be kept.
Responsible persons of the company who fail to keep a copy of its Articles of Incorporation or the roster of shareholders of unlimited liability in violation of the aforesaid provision shall be severally 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
A foreign company, after having been given certificate of recognition, shall have the same rights and obligations and shall be subject to the same jurisdiction of the authority as a domestic company, unless otherwise provided by law.
Article 376
(Deleted)
Article 377
The provisions of Article 9, Article 10 and Article 12 to 25 shall apply mutatis mutandis to a foreign company.
Article 378
A foreign company which has received a certificate of recognition to transact business in the Republic of China and which desires to cease doing so, shall apply to the competent authority for withdrawal of the recognition; 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 authority shall revoke or nullify the certificate of recognition granted to a foreign company:
1. Any of the particulars set forth in filing an application for recognition or any of the documents attached thereto have been proved to be false;
2. The company has been dissolved;
3. The company has been declared bankrupt.
The aforesaid revocation or nullification of a certificate of company recognition under the preceding Paragraph shall in no way impair the rights of creditors and the obligations of the company.
Article 380
A foreign company which surrenders its certificate of recognition or has its certificate of recognition revoked or nullified, shall complete liquidation of its business within the territory of the Republic of China or right and obligation incurred by its branch office. Any outstanding obligation shall still be discharged by such foreign company.
The aforesaid liquidation shall be undertaken 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 or managerial officer 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
A foreign company, after having received its certificate of recognition, may be subject, whenever necessary, to examination of its books, records and documents relating to its business by the Authority.
Article 385
Prior to any replacement or departure of its representative as provided in Article 372, Paragraph 2, a foreign company shall designate another representative and file a report stating the name, nationality and domicile or residence of such representative with the authority for registration.
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 recognition in the Republic of China, but designates a representative for the performance of juristic acts relating to its business in the territory of the Republic of China, shall file an application for recordation with the competent authority setting forth therein the following particulars:
1. The name, class of company, nationality and location of the company;
2. Its authorized capital and the date of its incorporation;
3. The business of the company and the juristic acts relating to its business to be done by its representative in the territory of the Republic of China; and
4. The name, nationality and domicile or residence of its designated litigious and non-litigious representative in the territory of the Republic of China.
If the aforesaid representative shall, from time to time, be required to reside in the territory of the Republic of China, the company shall establish a representative’s office and report its location in accordance with the aforesaid provisions.
The documents filed for recordation under the preceding two Paragraph shall be certified by the embassy/consulate, the representative office, business office of or any other institute authorized by the Ministry of Foreign Affairs and stationed at the locality where the competent authority of its own country or its representative conducts its/his business or legal acts or at the place where its representative’s office is located.
A foreign company may not set up a representative’s office within the territory of the Republic of China unless an application is filed for designation of the representative for record.
CHAPTER VIII Registration and Recognition of Companies
Section 1 Application
Article 387
In applying for company registration or recognition, an application together with a complete set of the documents as required shall be filed with the central competent authority by the responsible person who represents the company for its approval. In the case the application is filed by an agent, a power of attorney shall be attached thereto.
Where there is a plural number of responsible person designated to represent the company, one of them may be authorized to file the application.
The agent referred to in Paragraph I shall be limited to a certified public accountant or a lawyer.
Regulations governing company registration and recognition procedure and the alteration thereof shall be prescribed by the central competent authority.
The regulations to be prescribed under the preceding Paragraph include applicant, application documents, application procedure, deadline dates for filing the application, and other relevant matters.
The responsible person of a company who fails to file the application beyond the appropriate deadline date specified in the regulations to be prescribed under Paragraph IV hereinabove shall be imposed with a fine of not less than NT$ 10,000 but not more than NT$ 50,000.
Subject to the provisions set out in Paragraph IV hereinabove, the competent authority shall further order the responsible person to rectify his law violating act within a given time limit; and if he fails to take corrective action beyond the given time limit, he shall be imposed with a fine of not less than NT$ 20,000 but not more than NT$ 100,000 consecutively for each time of incompliance until the law violating act is rectified.
Article 388
In case any company 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
Upon an application by a company for certification of matters contained in its company registration file being kept by the competent authority, the competent authority may issue the certificate as requested.
Article 393
The responsible person of a company or any interested person may, with reasons stated, apply for an access to examine or for making copy of the contents of such company registration records or documents in file provided, however, that the authority may repudiate such application or may set up a limitation of the information or data to be copied by the applicant.
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 thereto or for making copy thereof:
1. The name of the company;
2. The scope of business of the company;
3. The location of the company;
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; and
8. 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 7 of the preceding Paragraph.
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 application filed by any person in accordance with this Act for pre-registration enquiry, registration, examination, or making copy of company name and scope of business, or requesting for certification of the company information registered, the competent authorities concerned shall charge the applicant an examination fee, registration fee, checking fee, copy fee, and/or certification fee in accordance with the appropriate charging rates to be fixed 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 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 and Article 383 amended on June 25, 1997 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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