Taiwan Companies Act

(Articles 51 to 100)

Article 51
When the Articles of Incorporation provide for one or several of the shareholders to conduct business, such shareholder or shareholders shall not resign without cause nor can other shareholders cause him or them to retire without cause.

Article 52
A shareholder shall conduct business in accordance with laws and ordinances, Articles of Incorporation, and decisions of the shareholders.
A shareholder who acts in violation of the aforesaid provision thereby causing loss or damage to the company, shall be liable to compensate the company.

Article 53
A shareholder who receives money on behalf of the company and does not turn in the said sum within a reasonable period of time, or appropriates the sum for his own use, shall repay the said money with interest and compensate the company for any loss or damage sustained thereby.

Article 54
A shareholder, without the unanimous consent of all other shareholders, shall not be a shareholder of unlimited liability of another company or a partner in a partnership business.
A shareholder who conducts business of the company, shall not, on his own account or on behalf of another, engage in the same business as that of the company.
In case a shareholder who conducts business of the company violates the provisions of the preceding paragraph, all other shareholders may, by a majority of vote, consider the earnings in such an act as earnings of the company unless one year has lapsed since the realization of such earnings.

Article 55
A shareholder, without the unanimous consent of all other shareholders, shall not transfer to another person all or a part of his contribution to the capital of the company.

Section 3 External Relations of a Company

Article 56
A company may, by its Articles of Incorporation, designate one or more shareholders to represent the company, and in the absence of such a provision each shareholder may represent the company.
The provision of Article 45, Paragraph 2, shall apply mutatis mutandis to the shareholder or shareholders who represent the company.

Article 57
A shareholder who represents the company shall have power to conduct all affairs pertaining to the business of the company.

Article 58
Any restriction imposed by the company power of representation of a shareholder cannot be set up as a defence against a bona fide third person.

Article 59
When a shareholder who represents the company buys or sells, lends or leases, or does any juristic act vis-a-vis the company on his own account or on behalf of another, he shall not at the same time represent the company; however, the repayment of debt to the company shall be excepted.

Article 60
When the assets of the company are not sufficient to meet its liabilities, the shareholders shall be jointly liable.

Article 61
Any one who becomes a shareholder of a company shall also be liable for the liabilities of the company contracted prior to his being shareholder.

Article 62
Any one who is not a shareholder, but leads other to believe that he is a shareholder, shall have the liabilities vis-a-vis a bona fide third person as though he were a shareholder.

Article 63
A company, unless losses have been covered, shall not make distribution of surplus profit.
Responsible persons of the company, acting in violation of the aforesaid provision, shall be severally subject to imprisonment not exceeding one year, detention, or singularly or in addition thereto a fine not exceeding NT$60,000.

Article 64
A debtor of a company cannot set off his debt to the company against his claim vis-a-vis a shareholder.

Section 4 Withdrawal of Shares

Article 65
In case the continuance of existence of a company is not specified in its Articles of Incorporation, and except that the rules for withdrawal of share capital are otherwise established, any shareholder of the company may withdraw his/her share capital upon close of each fiscal year, provided that a six-month prior notice of such intent in writing shall be given to the company.
A shareholder may, upon occurrence of a significant cause not attributable to him/her, withdraw his/her share capital at any time, regardless whether or not the continuance of existence of the company has been specified in its Articles of Incorporation.

Article 66
In addition to the cases mentioned in the preceding article, every shareholder shall cease to be one under any of the following circumstances:
1. The occurrence of a condition for withdrawal of shares stipulated in the Articles of Incorporation;
2. Death;
3. Bankruptcy;
4. Adjudication of the commencement of guardianship or assistantship;
5. Expulsion; and
6. Compulsory execution of the shareholder’s contribution to the capital by the court.
Where a shareholder shall cease to be one under item 6 of the preceding Paragraph, the execution court shall notify the company and other shareholders two months in advance of the compulsory execution.

Article 67
A shareholder may, by unanimous agreement of all other shareholders, be expelled under any of the following circumstances:
1. Inability to contribute the capital which should have been contributed or failure to do so despite repeated demand;
2. Violation of the provisions of Article 54 Paragraph 1;
3. Improper conduct detrimental to the interest of the company; and
4. Failure to attend to important duties of the company; however, such expulsion shall not be valid in respect of such a shareholder until after due notice has been given.

Article 68
If the name of a company contains the surname or a full name of a shareholder, such shareholder may, upon withdrawal of his shares, request the company to discontinue the use of his name.

Article 69
The settlement of account of a retiring shareholder shall be based on the financial condition of the company at the time of his withdrawal.
The contribution of the retiring shareholder shall, whatever the nature of his contribution, be repaid in cash.
If, at the time of withdrawal, certain affairs of the company have not yet been concluded, then allocation of a retiring shareholder’s share of profit and loss shall only be made after the due conclusion of such affairs.

Article 70
For withdrawal of share capital, a shareholder of a company shall file an application for share capital withdrawal with the competent authority for registration thereof, and shall, within two years after such withdrawal registration, stay liable, jointly and severally and without limitation, for the liabilities incurred by the company.
The provisions set out in the preceding Paragraph shall apply mutatis mutandis, to the shareholder of a company transferring his/her capital contribution.

Section 5 Dissolution, Consolidation or Merger and Reincorporation

Article 71
A company shall be dissolved under any of the following circumstances:
1. The occurrence of the conditions for dissolution stipulated in the Articles of Incorporation;
2. The accomplishment or impossibility of accomplishment of the purpose for which the company has been formed;
3. Unanimous agreement of all shareholders;
4. The reduction of the number of shareholders to a number below the minimum required by this Act;
5. Consolidation or merger with another company;
6. Bankruptcy; or
7. Order or judgment for dissolution.
In such cases as specified in items 1 and 2 of the aforesaid paragraph, if all or a part of the shareholders agree to continue the business, they may so continue, and those disagreed are deemed to be retired.
In the case specified in Item 4 of Paragraph 1, new shareholders may join the company to continue the business.
In case of continuation of the business under the circumstances specified in the two preceding paragraphs, the Articles of Incorporation shall be modified.

Article 72
A company may, with the unanimous agreement of all shareholders, consolidate or merge with another company.

Article 73
A company shall, upon adoption of a resolution to enter into the process of company merger or consolidation, prepare a balance sheet and an inventory of property.
A company shall, after having resolved to enter into the process of company merger or consolidation, give a notice to each creditor of the company as well as a public notice of such resolution, and shall fix a time limit of not less than thirty (30) days within which the creditors may raise their objections, if any, to such resolution.

Article 74
A company which fails to give the individual notice or the public notice or to settle its liabilities with or to provide an appropriate security for the claims of the creditors who have made objections within the time limit fixed under the preceding Paragraph shall not set up the company merger or consolidation resolution as a defence against such creditors.

Article 75
Rights and obligations of a company ceasing to exist after consolidation or merger shall be assumed by the surviving or new company.

Article 76
A company may, with unanimous agreement of all shareholders, change a part of its shareholders to shareholders with limited liability or admit shareholders of limited liability and reincorporate it into an unlimited company with limited liability shareholders.
The provisions of the aforesaid paragraph shall mutatis mutandis apply to a company continuing business in accordance with the provisions of Article 71, Paragraph 3.

Article 77
The provisions of Article 73 to 75 shall mutatis mutandis apply to the reincorporation of a company under the preceding article.

Article 78
The shareholders who become shareholders of limited liability under Article 76, Paragraph 1, shall still bear joint and unlimited responsibility for the obligations which the company acquired prior to its reincorporation, for a period of two years following registration of such reincorporation.

Section 6.Liquidation

Article 79
Unless otherwise provided in this Act or in the Articles of Incorporation or unless liquidators are otherwise appointed by a resolution adopted by the shareholders, liquidation of a company shall be undertaken by all of its shareholders.

Article 80
In the event of death of a member of the shareholders during a time of liquidation undertaken by all of them, participation of the deceased in the liquidation shall be undertaken by his successor. If there are several successors one of them shall be nominated from among themselves.

Article 81
In case a liquidator or liquidators cannot be determined in accordance with the provisions of Article 79, the court may, upon application by a concerned party, appoint a liquidator or liquidators.

Article 82
The court may, if it deems it necessary, upon the application of a concerned party, remove the liquidator; however, a liquidator chosen by shareholders may also be removed by a majority vote of the shareholders.

Article 83
A liquidator shall, within fifteen days after having assumed office, file a report to the court, setting forth his name, domicile or residence, and the date on which he assumed office.
The removal of a liquidator shall be reported to the court by the shareholders within fifteen days.
When a liquidator is appointed by the court, public announcement shall be made, and the same procedure shall be followed when a liquidator is removed.
A person who fails to comply with the time-limit for filing a report as provided for in Paragraph 1 or Paragraph 2 shall be subject to a fine of not less than NT$3,000, but no more than NT$15,000.

Article 84
The duties of a liquidator are as follows:
1. To wind up all pending business;
2. To collect all outstanding debts and to pay off all claims;
3. To allocate surplus or loss; and
4. To allocate the residual assets.
The liquidator in performing the aforesaid duties shall have the power to act on behalf of the company in all litigation matters; however, the transfer of the business including assets and liabilities to others shall be effected only if all shareholders so concur.

Article 85
In case of more than one liquidator, one or more may be selected to represent the company. If no one is so selected, each shall have the power to represent the company toward a third person. The execution of liquidated affairs shall be decided by a majority of liquidators.
Liquidators selected to represent the company shall, by mutatis mutandis application of the provision of Article 83, paragraph 1, file a report to the court.

Article 86
Any restriction imposed upon the power of representation of a liquidator shall not be asserted as a defense against a bona fide third person.

Article 87
The liquidators shall, forthwith upon assuming the office, examine the financial condition of the company and prepare a balance and an inventory of property, and shall deliver the same to all shareholders for their review.

Any person who impedes, refuses or evades the examination to be conducted under the provisions of the preceding Paragraph shall be imposed with a fine in an amount not less than NT$ 20,000 but not more than NT$ 100,000.
The liquidators shall complete the examination within a period of six months; and if the examination cannot be completed within the foregoing six month, an application, with good cause shown therein, for extension of the deadline date may be filed with the competent court by the liquidators.
The liquidators who failed to complete the examination within the time limit fixed in the preceding Paragraph shall each be imposed with a fine in an amount not less than NT$ 10,000 but not more than NT$ 50,000.
The liquidators shall, upon request made by any shareholder at any time or from time to time, provide the current status of progress of the liquidation process.
The liquidators who failed to comply with the provision set out in the preceding Paragraph shall be imposed with a fine in an amount not less than NT$ 10,000 but not more than NT$ 50,000.

Article 88
The liquidators shall by public announcement, after having assumed office, call the creditors to make statements of claims and send notice to known creditors.

Article 89
Where the aggregate of the assets of a company is insufficient to satisfy its liabilities, the liquidators shall file an application for declaration of bankruptcy.
The functional duties of liquidators shall terminate upon transfer of the matters transacted by them to the receiver in bankruptcy.
The liquidators who violated the provision set out in Paragraph One of this Article by failing to apply for declaration of bankruptcy shall each be imposed with a fine in an amount not less than NT$ 20,000 but not more than NT$ 100,000.

Article 90
The liquidators shall not allocate the assets of the company to the shareholders until all liabilities of the company have been discharged.
The liquidators who allocate assets of the company in violation of the aforesaid provision shall be severally subject to imprisonment for a period not exceeding one year, detention or, singularly or in addition thereto, a fine not exceeding NT$60,000.

Article 91
The distribution of residual assets, unless otherwise provided for in the Articles of Incorporation, shall be based on the ratio of net contribution of such shareholder after allocation of profit or loss.

Article 92
The liquidators shall, within fifteen days after winding up the company, draw up a final statement to be submitted to shareholders for approval. The shareholders shall be deemed to have given approval, if no objection is raised within one month after having received the said statement; however, unlawful conduct on the part of the liquidators shall be excepted.

Article 93
The liquidators shall, within fifteen days after completing of the liquidation and presentation of a report to shareholders for approval, file a report with the court.
Liquidators who violate the aforesaid time-limit for filing a report, shall be severally subject to a fine of not less than NT$3,000, but not more than NT$15,000.

Article 94
The account books, statements and documents relating to business and liquidation affairs of the company shall be kept for a period of ten years from the date of filing a report to the court after completion of liquidation, and the custodian of the aforesaid materials shall be appointed by a majority of the shareholders.

Article 95
The liquidators shall perform their duties with care of a good administrator. In case of any loss or damage to the company in consequence of their lack of care, they shall be jointly liable to make good such loss or damage to the company; and if due to any intentional act or gross negligence, they shall in addition be jointly liable to make good such loss or damage to any third person.

Article 96
The joint and unlimited liability of the shareholders shall terminate five years after filing articles of dissolution.

Article 97
The relation between liquidators and a company shall, unless otherwise provided in this Act, be determined in accordance with the provision contained in the Civil Code pertaining to mandate.

CHAPTER III Limited Company

Article 98
A limited company shall be organized by one or more shareholders. The shareholders of a company shall, with an unanimous agreement, draw up the Articles of Incorporation and shall affix their respective signatures or personal seals thereon. The articles of incorporation shall be kept at the head office of the company, and a duplicate thereof shall be held by each shareholder of the company.

Article 99
The liability of shareholders to the company shall be limited to the extent of the capital contributed by each of them.

Article 100
The capital stock of a limited company shall be paid up in full by all its shareholders, and shall not be paid in installments nor be raised from external sources.