By Hung Ou Yang
Important Changes in the Amendment of the Taiwanese Company Act for Foreign Investors include the so-called Tatung Provision.
On July 6, 2018, the Taiwanese Congress (Legislative Yuan) passed the amendment of the Taiwanese Company Act. One of the most important changes is the so-called "Tatung provision", Article 173-1. It provides that any shareholder who has continuously held more than 50% of outstanding shares for a period of more than three months may call an interim shareholder meeting.
Tatung provision aims to solve the problems the non-controlling shareholders are facing with regard to the terrible management of the controlling shareholders/directors.
Before the amendment, a shareholder who has acquired more than 3% of outstanding shares of a particular company for more than one year may request the board to call an interim shareholder meeting per Article 173, but he cannot convene such shareholder meeting all by himself in the absence of such request. Only when the board fails to give a notice for such interim shareholder meeting within 15 days and the government issues an approval can the shareholder convene the shareholder meeting on his own. In other words, under Article 173, the controlling shareholder/director may more than easily prevent a non-controlling shareholder from convening an interim shareholder meeting for the company's management.
In the Tatung Company's shareholders' dispute, you can imagine how hard it was when the non-controlling shareholders would like to convene an interim shareholder meeting for the deteriorating business managed by the directors of Tatung. Here, Article 173-1 makes it much easier to convene an interim shareholder meeting, no longer restricted by the board and the government. In addition, Article 173-1 may be applied to all the companies limited by shares regardless whether the shares have been issued in public or not.
In the same context, under Article 192-1, the board of "a company limited by shares" may no longer examine the qualification of a director candidate before a shareholder meeting. The controlling shareholder/director used to take advantage of the examination right to avoid any non-controlling shareholder from competing for management. Now, Article 192-1 cancels a useful weapon of the controlling shareholder/director in a shareholders' fight.
Third, Article 228-1 provides that "a company limited by shares" may pay dividends to the shareholders not annually, but every six months or every quarter, if the charter authorizes the board to make such decision. Thus, the dividends policy of a Taiwanese listed company could be much more flexible than before. This change reflects the international trend with regard to the dividends policy in other countries.
Hung Ou Yang, Esq. is the Managing Attorney of Brain Trust International Law Firm, and specializes in handling transnational legal disputes, business and white collar crime, business litigation, and the negotiation and drafting of international agreements. Hung Ou Yang has successfully resolved many high-profile civil, criminal, and transnational disputes, including a complaint concerning pesticide-contaminated land leased by RT-Mart, anti-dumping investigation in connection with CSC's carbon steel plate, and transnational property litigation concerning an internationally-renowned scholar. Hung Ou Yang also has a wealth of experience in domestic and overseas litigation and negotiations.
Copyright: Brain Trust International Law Firm
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
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