SAINT ISLAND INTELLECTUAL PROPERTY GROUP

The recent amendment to Company Act having considerably changed the provisions of 148 articles was passed by Taiwan’s Legislative Yuan on July 6, 2018 and took effect on November 1, 2018.  Being aimed at meeting the needs of newly rising business models as well as prosperous development of innovative entrepreneurships to cope with the global economic challenges, this amendment covers a variety of improvements concerning the relaxation of unnecessary restrictions on companies’ business operation and at the same time, strengthens corporate governance so as to intensify protection of shareholders’ rights and interests.  Moreover, in compliance with the Asia-Pacific Group’s Anti-Money Laundering requirements, a more thoroughly designed scheme to prevent money laundering is also established through this amendment.

Among others, three essential topics in the amendment are highlighted as follows:

1. A foreign company no longer has to be recognized for its capability as a legal entity.
   
   Before the amendment, foreign companies could enjoy the same rights and capabilities as Taiwanese companies only after being recognized by the government.After such recognition is abolished in the amendment, a foreign company simply needs to register for a branch office in order to do business in Taiwan.The simplification of administrative procedures greatly benefits foreign companies and in particular, can save them from a very complicated situation when those foreign companies having not been recognized encounter any disputes in Taiwan.
    
2. A company can issue stocks without par value.
   
   Under the old Company Act, for practical reasons a company usually selects to issue stock shares at a fixed price of NT$10 per share.In the amendment, with reference to the corresponding systems in the U.S., Japan, France and Singapore, the non-par-value share becomes an option for a company.It is expected to favor the financing activities for a newly established company, as it allows the entrepreneurs to raise funds and meanwhile, keep control or ownerships at a much lower cost.
    
3. A company is required to declare the information of its substantial beneficiaries.
   
   In response to Asia-Pacific Group’s appraisal on Money Laundering in 2018, in which transparency about a company’s substantial beneficiaries is requested, the amendment regulates that a company shall declare the information of its directors, supervisors, managers, as well as the shareholders who own more than 10% of the company’s shares or capital amount.
   
   The information to be declared shall include the name of legal person/entity, ID number, shareholding ratio or the amount of contribution of the shareholder.The company shall report the above information through the platform made by Taiwan Depository & Clearing Corporation (https://ctp.tdcc.com.tw).This platform is neither accessible to the public nor open for inquiry, save for government administration agency or court which may be handling or investigating money-laundering cases.Since the amendment became effective on November 1, companies are required to submit such a report during the period from November 1, 2018 to January 31, 2019.

It is generally agreed that this amendment has resolved several controversial issues that happened in the past decade, moving forward Taiwan’s corporate legal system to be in line with the international financial environment.  Because the voluminous provisions being amended have a wide-reaching impact on not only corporate laws but also securities laws, the government will have to make further adjustments in relevant regulations accordingly.  Interested parties are advised to keep track of subsequent regulatory updates from time to time.