Taiwan Imposes New Reporting Obligation on Company Shareholder Information – Corporate Law/Commercial Law
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The situation: On November 1, 2018, amendments to the Taiwan Companies Act (“TCA”) passed by the Taiwanese Legislature on July 6, 2018 came into effect.
The result: While some regulations have been eased and corporate flexibility has been increased, the TCA amendments also impose a new reporting requirement on companies regarding insider information to improve corporate transparency and governance.
Look forward: The newly implemented reporting requirement is for a Taiwanese company (including private companies) to periodically submit a report on the shareholding status and other information of its directors, supervisors, officers and shareholders holding more than 10% of its shares on the website designated by the competent authority. The first of these reports must be submitted no later than January 31, 2019.
Taiwan’s legislature passed a series of amendments to the TCA on July 6, 2018, with these amendments taking effect on November 1, 2018. These amendments are part of a major overhaul of the TCA aimed at improving environmental competitiveness of Taiwan business and aim to: (i) increase the flexibility of business operations; (ii) strengthen corporate transparency; (iii) creating a friendlier environment for startups and entrepreneurship; (iv) strengthen corporate governance; (v) improve shareholder protection; and (vi) conform to international trends.
Some of the key changes applicable to partnerships limited by shares (i.e. corporations) are discussed below, and these changes will affect foreign investors who have investments in Taiwan.
Increase the flexibility of business operations
The new TCA amendments allow a private company to have only one or two directors, instead of requiring a board of directors of at least three directors. Prior to the TCA amendments, a private company had to establish a board of directors consisting of at least three directors. To extend the autonomy of the company, a private company can now choose not to set up a board of directors but to elect one or two directors, if this is provided for in its articles of association. If a company elects only one director, that director will act as chairman, and all provisions relating to boards of directors are not applicable to that company.
Private companies with one corporate shareholder are allowed to have no supervisor. Provided there are no other shareholders to protect in a single-shareholder company, the amended TCA now allows such a company not to have a supervisor in place.
Under the new amendments, the board of directors of a private company is authorized to pass written resolutions. As long as the company’s articles of association permit, its board of directors may unanimously resolve board questions in writing without holding a board meeting.
The new amendments also allow a private company to convene a general meeting by videoconference, if its articles of association expressly provide for this. In this case, a company can freely settle issues related to the registration and confirmation of the identity of shareholders at the meeting.
Improving corporate transparency
In order to better implement anti-money laundering efforts, a company is now required to annually submit a shareholding report showing the status of directors, supervisors, officers and shareholders holding more than 10% of its shares. . The first submission must be made no later than January 31, 2019. In addition, if there is a change in the shareholding status of any of the above-mentioned persons, a company is required to report this change within 15 days. .
Create a friendlier environment for startups and entrepreneurship
Previously, a company could only distribute dividends once a year after ratification by shareholders at the annual general meeting. In order to better incentivize shareholders to invest, the amended TCA now allows a company to distribute dividends quarterly or semi-annually, provided that the estimated taxes, the estimated remuneration and the legal reserve have been provisioned. For cash dividend distributions in the first three quarters or first half, a resolution passed by the board of directors will suffice, rather than requiring a shareholder resolution.
Additionally, under the new amendments, a company can now choose to issue shares with or without par value.
The updated TCA also allows a private company to issue multiple classes of preferred stock, each with variations on voting rights, veto rights, or restrictions on election as a director or supervisor, as well as the rights of certain seats to elect as directors or administrators. share transfer restrictions.
- Amendments to the TCA aimed at improving the competitiveness of Taiwan’s business environment passed by the Taiwanese legislature on July 6, 2018 entered into force on November 1, 2018.
- Generally, the TCA amendments were aimed at increasing the flexibility of business operations, improving business transparency, creating a friendlier environment for startups and entrepreneurship, strengthening corporate governance, improving shareholder protection and conform to international trends.
- Other requirements imposed by the TCA amendments include a new reporting requirement for Taiwanese companies to report shareholding status and other information of their directors, supervisors, officers and shareholders holding more than 10% of its shares. must be submitted for the first time in January. 31, 2019.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.