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. A shareholder who represent the company shall have power to conduct all affairs pertaining to the business of the company.
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. 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.
When the assets of the company are not sufficient to meet its liabilities, the shareholders shall be jointly liable. 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.
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. A company, unless losses have been covered, shall not make distribution of surplus profit.
A debtor of a company cannot set off his debt to the company against his claim vis-a-vis a shareholder. 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.
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.
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. 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. 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.
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.
Approval by two thirds or more 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. A company may, with the unanimous agreement of all shareholders, consolidate or merge with another company. 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.
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. Rights and obligations of a company ceasing to exist after consolidation or merger shall be assumed by the surviving or new company.
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.
A company may reincorporate into a limited company or a company limited by shares with the approval by two thirds or more of all shareholders to modify its Articles of Incorporation. The provisions of Article 73 to 75 shall mutatis mutandis apply to the reincorporation of a company under the preceding two articles. The shareholders who become shareholders of limited liability under Article 76, Paragraph 1 or Article , 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.
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. 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.
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. 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.
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.
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.
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.
Any restriction imposed upon the power of representation of a liquidator shall not be asserted as a defense against a bona fide third person. 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. The liquidators shall complete the examination within a period of six months; and if the examination can not 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 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 shall by public announcement, after having assumed office, call the creditors to make statements of claims and send notice to known creditors.
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 shall not allocate the assets of the company to the shareholders until all liabilities of the company have been discharged. 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.
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.
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. 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.
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.
The joint and unlimited liability of the shareholders shall terminate five years after filing articles of dissolution. 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.
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.
The liability of shareholders to the company shall, unless otherwise provided for in Paragraph Two, be limited to the extent of the capital contributed by each of them. Equity capital to be contributed other than cash by shareholders may be in the form of monetary credit extended to the company, or the property or technical know-how required by the business of the company. 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.
The Articles of Incorporation of a limited company shall contain the following particulars: 1. The scope of business to be operated by the company; 3. The aggregate of capital stock and the capital contribution made by each shareholder; 5. The ration or standards for profit distribution and loss apportionment among all shareholders; 6. The location of the head office and the branch office s , if any; 7.
The number of directors; 8. The causes of dissolution of the company, if any; and 9. The date of establishment of the articles of incorporation. Each shareholder shall have one vote irrespective of the amount of his contribution to capital; however, the Articles of Incorporation may prescribe that votes shall be allocated to the shareholders in proportion to their responsible contributions to capital.
In case the government or a juristic person becomes a shareholder, the provisions in Article shall mutatis mutandis apply. A limited company shall keep at its head office a shareholders roster, which shall contain the following particulars: 1.
The name or title, domicile or residence of each shareholder; and 3. The date of payment of share equity by each shareholder. Increase of the amount of capital stock of a limited company shall be approved by a majority of voting shares of all shareholders. Under the circumstance set forth in the proviso of the preceding paragraph, new shareholders may be allowed to join the company with an approval by a majority of voting shares of all shareholders.
Subject to an approval by a majority of voting shares of all shareholders, a limited company may effect a capital reduction project or change its organization into a company limited by shares. The shareholders of a limited company who disagree with the proposals set forth in the preceding 3 paragraphs shall be deemed to be in agreement with the portion of amendment made in the Articles of Incorporation in respect to such proposals.
After the company has adopted a resolution for the change of organization, it shall immediately notify each of its creditors and make a public announcement.
A company, after the change of organization, shall assume the debt owned by it prior to its change of organization. The provisions of Article 73 and Article 74 shall apply mutatis mutandis to reduction of capital.
A limited company shall have at least one but not more than three directors to execute the business operation and to represent the company who shall be elected from among the shareholders with disposing capacity and shall be approved by two thirds or more of the voting shares of all shareholders. When there are several directors, the Articles of Incorporation may stipulate to have one director to act as the chairman of directors and to represent the company externally; the directors shall elect a chairman of directors from among the directors by a majority vote of all directors.
The provisions set out in Article 30, Article 46, Articles 49 through 53, Paragraph Three of Article 54, Articles 57 through 59, Paragraph Three of Article , Article , and Paragraph One and Two of Article of this Act shall apply mutatis mutandis to the directors of a limited company.
Shareholders who do not conduct business may, from time to time, exercise power of audit, and the provisions in Article 48 shall mutatis mutandis apply to such power of audit. Upon close of each fiscal year, the directors shall prepare various reports and financial statements in accordance with the provisions of Article of this Act and shall deliver the same to each of the shareholder for their approval; such approval shall be approved by a majority of voting shares of all shareholders.
The annual reports and financial statements referred to in the preceding Paragraph shall be duly delivered to shareholders within six months after close of each fiscal year.
If no objection is raised by any shareholder over a period of one month after such delivery , they shall be deemed to have been approved by all shareholders. The provisions set out in Article , Articles through , Article , Article , Paragraph One of Article and Paragraph One of Article of this Act shall apply mutatis mutandis to a limited company.
A shareholder shall not, without the consent of a majority of voting shares of all other shareholders, transfer all or part of his contribution to the capital of the company to another person or persons. The directors shall not, without the consent of two thirds or more of the voting shares of all other shareholders, transfer all or part of their contribution to the capital of the company to another person or persons.
The shareholders who disagree with the transfer as mentioned in the preceding two paragraphs, shall have priority to accept such transfer. If they do not accept the transfer, it shall be deemed that their consent has been given for the transfer and to amend the Articles of Incorporation in regard to matters relating to the shareholders and the amount of their contribution to the capital of the company.
In case the transferee or transferees are not designated within the prescribed time limit or the transferee or transferees designated do not accept the terms and conditions set forth for the transfer, it shall be deemed that consent has been given for the transfer and for the modification or alteration of the Articles of Incorporation in regard to matters relating to the shareholders and the amount of their contribution to the capital of the company.
A company shall, after its losses have been covered and all taxes and dues have been paid and at the time of allocating surplus profits, first set aside ten percent of such profits as a legal reserve.
However when the legal reserve amounts to the authorized capital, this shall not apply. Aside from the aforesaid legal reserve, a company may, by the provisions of its Articles of Incorporation or with the consent of two thirds or more of the voting shares of all shareholders, appropriate another sum as a special reserve.
A modification of Articles of Incorporation, consolidation or merger and dissolution of a limited company shall be approved by two thirds or more of voting shares of all shareholders.
Subject to the provision of the preceding paragraph, for modification of Articles of Incorporation, consolidation or merger, dissolution and liquidation of a limited company, the relevant provisions of the unlimited company shall apply mutatis mutandis.
An unlimited company with limited liability shareholders shall be organized by shareholders of unlimited liability and shareholders limited liability.
Shareholders of unlimited liability shall bear joint unlimited liability for obligations of the company, and shareholders of limited liability shall be liable to the company only to the extent of the capital contributed by them. The provisions of Chapter II shall mutatis mutandis apply to an unlimited company with limited liability shareholders unless otherwise provided for in this chapter.
The Articles of Incorporation of an unlimited liability with limited liability shareholders shall, in addition to particulars set forth in Article 41, state the liability of each shareholder whether unlimited or limited.
A shareholder of limited liability cannot contribute his capital in the form of service. Any shareholder with limited liability may, upon close of each fiscal year, examine the accounting books and records, the current condition of the business operations and the property of a limited company; and when it is deemed necessary, the court may, at the request of the shareholders with limited liability, allow them to examine at any time the accounting books and records, and the conditions of the business operations and the property of the company.
A shareholder of limited liability shall not, without the consent of a majority of shareholders of unlimited liability, transfer all or part of his contribution to the capital of the company to an other person or persons.
The provisions of Article , Paragraph 2 and 4, shall mutatis mutandis apply to the transfer of contribution specified in the preceding paragraph.
A shareholder of limited liability may engage in the same business as that of the company either on his own account or on behalf of another and may also become a shareholder of unlimited liability in another company or a partner in partnership business. A shareholder of limited liability who leads others to believe that he is a shareholder of unlimited liability, shall be liable to bona fide third person as though he were a shareholder of unlimited liability. A shareholder of limited liability can neither conduct the business of the company nor represent the company in its external affairs.
A shareholder of limited liability may not withdraw his contribution to the capital by reason of an adjudication of the commencement of guardianship or assistantship. Upon the death of a shareholder of limited liability, his contribution to the capital shall devolve upon his successors. A shareholder of limited liability may withdraw his shares due to some serious cause for which he is not personally responsible with the consent of a majority of the shareholders of unlimited liability, or he may apply to the court for sanction to withdraw.
A shareholder of limited liability may, with the unanimous agreement of all shareholders of unlimited liability, be expelled under any of the following circumstances: 1. Non-performance of his obligation to contribute his capital share; or 2.
Improper conduct detrimental to the interest of the company. The aforesaid expulsion shall not be valid in respect to such shareholder until after due notice shall have been given to him. A company shall be dissolved upon the withdrawal of all shareholders of unlimited liability or of limited liability; however, the remaining shareholders may, with unanimous agreement, join with either shareholders of unlimited liability or shareholders of limited liability to continue the business.
When all shareholders of limited liability withdraw as aforesaid, two or more shareholders of unlimited liability may, with unanimous agreement, reincorporate the company into an unlimited company.
When shareholders of unlimited liability and shareholders of limited liability unanimously agree to reincorporate the company into an unlimited company, it shall be done in accordance with the provisions of the preceding paragraph.
Liquidation shall be undertaken by all shareholders of unlimited liability, provided that liquidators may be otherwise appointed by a resolution adopted by a majority of the shareholders of unlimited liability; the same shall apply to the discharge of such liquidators. A company limited by shares shall have two or more promoters. Any person without disposing capacity, with limited disposing capacity or having been adjudicated of the commencement of assistantship and such assistantship having not been revoked yet is not qualified as a promoter.
Any government agency or any juristic person may become a promoter, provided, however, that the juristic person eligible to act as a promoter shall be limited to that conforming to any of the following requirements: 1. A company limited by shares which is organized by a single government shareholder or a single juristic person shareholder shall be free from restrictive requirement set out in Paragraph One of the preceding Article.
The company referred to in the preceding paragraph may choose not to have the board of directors but to have one or two directors; for a company with only one director, such director shall be the chairman and the functional duties and powers of the board of directors shall be exercised by such director, and the provisions governing the board of directors as set out in this Act shall not apply to such company; for a company with two directors, the provisions governing the board of directors as set out in this Act shall apply mutatis mutandis.
The company referred to in Paragraph One may choose not to have supervisors; the provisions governing supervisors as set out in this Act shall not apply to such company. The directors and supervisors of the company referred to in Paragraph One shall be appointed by such government shareholder or juristic person shareholder. The promoters of a company limited by shares shall draw up the Articles of Incorporation containing the following particulars and shall affix thereon their respective signatures or personal seals: 1.
For a company issuing par value shares, the total number of shares and the par value of each share certificate; for a company issuing no par value shares, the total number of shares. The location of the company; 5. The number of directors and supervisors, and the term of their respective offices; and 6.
The date of establishment of the Articles of Incorporation. The following matters shall not take effect, unless they are stipulated in the Articles of Incorporation: 1. Establishment of branch office; 2. The cause s for dissolution of the company, if any; 3. The kind of special shares and the rights and obligations covered by such shares; and 4. Special benefits to be accorded to promoters, and the name of such beneficiaries.
The promoters, after having subscribed in the first issue to the total number of shares, shall make full payment for the numbers of shares respectively subscribed to, and elect directors and supervisors. The provisions of Article shall apply mutatis mutandis to the aforesaid election. Equity capital to be contributed other than cash by promoters may be in the form of the property or technical know-how required by the business of the company.
In case the promoters have not subscribed to the total number of shares in the first issue, the remainder shares shall be subscribed to by solicitation. When the aforesaid subscription to shares is to be solicited, special shares may be issued in accordance with the provisions of Article The promoters, when publicly soliciting subscriptions to shares, shall first have the following documents and information prepared, and then file the same along with an application to the authority in charge of securities exchange for examination and approval: 1.
Business plan; 2. Full names and resumes of the promoters, and the number of shares subscribed, and the kind of contribution; 3. Prospectus; 4. Names and locations of banks or post offices authorized to collect payment for shares subscribed; 5. Names of underwriters or agents, if any, and the covenants between the promoters and such underwriters or agents; and 6.
Other matters as may be prescribed by the authority in charge of securities exchange. The total number of shares subscribed by the aforesaid promoters shall not be less than one-fourth of the total number of shares in the first issue.
Within thirty days after receiving a notice from the authority in charge of securities exchange, all documents and information specified in various items of Paragraph 1 of this Article shall be annotated with the reference number and date of the approval letter and publicly announced provided, however, that the covenants referred to in Item 5 of the Paragraph 1 may be exempt from public announcement.
Banks or post offices authorized to collect payments for shares subscribed to shall have the obligation to certify the amount of money received, and the amount so certified shall be deemed as the capital money already received.
Where there is any change in the matters described in the application; and no correction thereto has been made within a given time limit after having been required to do so.
In case of annulment of approval in accordance with the preceding article, the solicitation shall be cancelled if not yet in progress; if solicitation is already in progress, persons so drafted may demand a refund of the original issuing value of shares plus interests thereon to be calculated at the legal rate.
The prospectus shall state the following particulars: 1. Particulars set forth in Article and Article ; 2. Number of shares subscribed to by each of the promoters; 3.
If share certificates are issued above par value, the issuing value; 4. The time-limit for full subscription by solicitation and the statement that if the shares are not subscribed in full within such time-limit, the subscribers may rescind their subscription; and 5.
In case special shares are issued, the total amount of such shares and the matters specified in various items of Paragraph One of Article The promoters shall prepare a share subscription form indicating therein the matters required in Paragraph One, Article and the reference number and the date of the approval letter given by the authority in charge of securities, and shall make such form available to the subscribers for them to fill in the number and amount of the shares to be subscribed and their respective domiciles or residences, and to affix thereon their respective signatures or personal seals.
In case the share certificates are issued at a premium, the subscribers shall indicate in the share subscription form the amount of share price they agree to pay. Subscribers shall have the obligation to pay for the shares they have subscribed to in the subscription form. For a company issuing par value shares, its issue price of share certificates shall not be less than the par value thereof, unless otherwise provided for by the competent authority in charge of securities affairs for public companies.
For a company issuing no par value shares, its issue price of share certificate shall have no restrictions. When the total number of shares in the first issue has been subscribed to in full, the promoters shall immediately press each of the subscribers for payment. Where share certificates are issued above the par value thereof, the amount in excess of such value shall be collected at the same time with the payment for shares.
Where subscriber delays payment for shares as provided in the preceding article, the promoters shall fix a period of not less than one month and call upon each subscriber to pay up, declaring that in case of default of payment within the stipulated period their right shall be forfeited.
After the promoters have made the aforesaid call, the subscribers who fail to pay accordingly shall forfeit their rights and the shares subscribed to by them shall be otherwise sold.
Under the aforesaid circumstances, compensation for loss or damage, if any, may still be claimed against such defaulting subscribers. After the share price payable by all subscribers under the preceding Article has been fully paid up, the inaugural meeting of the company shall be convened by the promoters within two months. The provisions of Paragraphs One, Four, Five of Article , Article , Article , Article , Article , Article , Article , Paragraphs One, Two, Four, Five of Article and Articles to shall apply mutatis mutandis to the procedure and resolutions of the inaugural meeting; however, in the election of directors and supervisors, the provisions of Article shall apply mutatis mutandis.
At the inaugural meeting of the company, the following matters shall be reported by the promoters: 1. The Articles of Incorporation; 2. The roster of shareholders; 3. The total number of shares issued; 4. The name of subscribers and the kinds, quantities, values or appraisal standards of the property, technical know-how other than cash provided by subscribers as their capital contributions, if any; 5.
The incorporation costs to be borne by the company, and the remuneration payable to promoters; 6. The total number of special shares, if any, to be issued; and 7.
The roster of directors and supervisors of the company, which roster shall indicate the domiciles or residences, the serial number of ID Cards or the reference number of the status certificates issued by the government of them. At the inaugural meeting of a company, election of the directors and supervisors shall be effected. The directors and supervisors elect shall, upon election, immediately investigate the accuracy of the matters reported by promoters under the preceding Article, and shall report to the inaugural meeting of the investigation results.
Where any promoter is elected a director or a supervisor who has a personal interests in the matters subject to investigation, then the inaugural meeting shall elect another person as the substitute of said promoter to perform the investigation.
The inaugural meeting may curtail the remuneration given or special privileges accorded to the promoters and expense incurred in the incorporation of the company, if any is found excessive. If the payment on shares other than in cash is overestimated in value, the inaugural meeting may reduce the number of shares to be given or order the subscriber to make up for the deficiency. All shares in the first issue, which have not been subscribed to and those which, though subscribed, have not been paid for, shall be subscribed and paid for the promoters jointly and severally.
The same shall apply to those shares which have been subscribed but eventually rescinded. In the circumstances specified in Article and Article , the company may claim against the promoters for compensation for loss or damage, if any. In the event that a company not be formed, the promoter shall be jointly and severally responsible for the consequence of their acts in forming the company and all expenses incurred.
The same shall apply to that portion of the expenses which were curtailed on account of being excessive. The inauguration meeting may amend the Articles of Incorporation or resolve not to incorporate the company.
The provisions of Article , Paragraphs 2 through 4 shall apply, mutatis mutandis, to the aforesaid amendment of Articles of Incorporation; and the provisions of Article shall apply, mutatis mutandis, to the aforesaid resolution not to incorporate the company.
Where three months have elapsed after the total number of shares in the first issue has been contributed but the payment for which has not been fully met, or, where the payment has been fully met but the promoters have not called the inaugural meeting within two months, the subscribers may rescind their subscription. After the conclusion of the inaugural meeting, no subscriber may rescind his subscription. The liability of shareholders to the company shall, unless otherwise provided in the paragraph 2, be limited to payment in full of the shares they have subscribed.
The promoters shall be jointly and severally liable to the company for compensation for loss or damage in consequence of an neglect on their part in the performance of their duties connected with the formation of the company.
The promoters shall, even after incorporation, be jointly and severally liable for debts of the company incurred prior to incorporation. The capital of a company limited by shares shall be divided into shares, and a company shall choose either par value or no par value shares when issuing shares.
For a company issuing par value shares, each share shall have the same par value; for a company issuing no par value shares, the payment for such no par value shares shall be fully set aside as equity capital. A portion of the shares may be designated as special shares, with the kind of such special shares to be specified in the Articles of Incorporation.
The total number of shares as specified in the Articles of Incorporation may be issued in installments; for shares to be issued at the same time and under the same conditions of issuance, the issuance price thereof shall be the same.
The method to determine the issuance price for a public company may be prescribed by the competent authority in charge of securities affairs. Equity capital to be contributed other than cash by shareholders may be in the form of monetary credit extended to the company, or the property or technical know-how required by the company, provided, however, that the amount of such substitutive capital contribution shall require a prior approval of the board of directors.
When a company issuing share certificates converts all of its par value shares into no par value shares in accordance with Paragraph One, the share price of issued par value shares shall be considered to be not written from the record date of such convert. The preceding four paragraphs shall not apply to public companies.
A company choosing to issue no par value shares shall not convert its shares into par value shares. A company may, in pursuance of the resolution adopted by its board of directors, apply to the competent authority in charge of securities affairs for an approval of public issuance of its shares. A public company has resolved, moved to an unknown place, or failed to perform the duties as a public company under the Securities and Exchange Act for causes not attributable to the company, the competent authority in charge of securities affairs may cease its status as a public company.
In the case of a government owned company, the public issuance of its shares and the cease of its status as a public company shall require a special prior approval of the competent authority in charge of such enterprise. After its incorporation, the company may, pursuant to a resolution adopted by a majority vote of a meeting of the board of directors attended by two-thirds or more of all the directors, issue new shares as the consideration payable by the company for its acquisition of the shares of another company, without being subject to the restrictions set out respectively in Paragraphs One through Three, Article of this Act.
After its incorporation, for improving its financial structure or resuming its normal operation, the company participating in the special approval of the governmental bailout program may issue and transfer new shares to the government as the consideration for receiving governmental financial help.
Such issuing procedure shall not be subject to the restrictions regarding issuance of new shares set forth in this Act and the regulations thereof shall be prescribed by the central competent authority. In the case that the bailout program under the preceding paragraph reaches NTD 1 billion, the competent authority of the special approval and the company receiving such bailout shall report its self-help plan to the Legislative Yuan.
Where a company is to issue special shares, it shall include in its Articles of Incorporation provisions concerning: 1. Order, fixed amount or fixed ratio of allocation of dividends and bonus on special shares; 2. Order, fixed amount or fixed ratio of allocation of surplus assets of the company; 3. Order of or restriction on or no voting right on the exercise of voting power by special shareholders; 4.
Multiple voting right or veto power over specific matters on the exercise of voting power; 5. Number, method or formula for special shares to be converted into common shares; 7. Restrictions on transfer of special shares; and 8. Other matters concerning rights and obligations incidental to special shares.
Special shareholders with multiple voting right as referred to in Item Four of the preceding paragraph shall have the same voting right as common shareholders for the election of supervisors. The following special shares shall not apply to a public company: 1. Special shares referred to in Item Four, Five and Seven of the preceding paragraph. Special shares to be converted into multiple common shares. All special shares issued by a company shall be redeemable, provided that the privileges accorded to special shareholders by the Articles of Incorporation shall not be impaired.
In case a company has issued special shares, any modification or alteration in the Articles of Incorporation prejudicial to the privileges of special shareholders shall be adopted in a resolution by a majority of the shareholders present who represent two-thirds or more of the total number of its outstanding shares and shall also be adopted by a meeting of special shareholders.
For a company whose share certificates have been publicly issued, if the total number of shares represented by shareholders attending a shareholders' meeting is not sufficient to meet the criteria as specified in the preceding paragraph, the said resolution may be adopted by a large majority representing two thirds of the votes at a shareholders' meeting attended by shareholders representing a majority of the total number of issued shares, and a favorable resolution to be adopted by a meeting of special shareholders shall be also be required.
In case stricter criteria for the total number of shares represented by the attending shareholders and the number of votes at the shareholders' meetings referred to in the preceding two paragraph are specified in the Articles of Incorporation of a company, such stricter criteria shall govern.
The provisions governing shareholders' meetings shall apply. Where there are several persons owning the same share or shares, such co-owners shall select one of them for the exercise of their shareholders rights. The co-owners of a share shall be jointly and severally liable to the company to pay for the share so owned. A company shall not issue share certificates, unless it has completed the procedure for incorporation registration or for company alteration registration as required for issuance of new shares.
However, this clause shall not apply to the companies whose share certificates are to be issued under the provisions otherwise provided for by the authority in charge of securities. Share certificate issued in violation of the provisions set out in the preceding Paragraph shall be null and void. However, holders of such share certificates may claim for damages against the issuers of such share certificates. A public company shall, within three months after having completed the procedures for company incorporation registration or for company alteration registration as required for issuance of new shares, issue its capital shares.
For the shares to be issued by a company, the issuing company may be exempted from printing any share certificate for the shares issued. A company not printing its share certificate in accordance with the provision of the preceding paragraph shall register the issued shares with a centralized securities depositary enterprise and follow the regulations of that enterprise. The transfer and creation of pledge for the shares registered with a centralized securities depositary enterprise shall be handled by the company or by way of book-entry transfer; Article of this Act and Article of the Civil Code shall not apply.
Amended by Act 40 of Amended by Act 2 of Amended by Act 28 of Amended by Act 44 of Amended by Act 4 of Amended by Act 35 of Amended by Act 15 of Amended by Act 31 of Amended by Act 36 of Amended by Act 21 of Amended by Act 5 of Amended by Act 34 of Amended by Act 11 of Amended by Act 10 of Amended by Act 16 of Amended by Act 22 of Amended by Act 7 of Amended by Act 39 of Amended by Act 42 of Amended by Act 9 of Amended by Act 17 of Amended by Act 3 of Amended by Act 8 of Amended by Act 12 of Amended by Act 26 of Amended by Act 37 of Amended by Act 38 of Table of Contents.
Reset Get Provisions Whole Document. Document Provision 15 Mar Search within Legislation. Exit Search. Search Results. Short title 1. This Act may be cited as the Companies Act. Division into Parts 2. Preliminary sections A. Part II sections Administration of this Act sections Division 1 — Incorporation sections Division 2 — Powers sections A.
Division 1 — Prospectuses sections Division 2 — Restrictions on allotment and commencement of business sections Division 3 — Shares sections 62A Division 4 — Substantial shareholdings sections Division 5 — Debentures sections Division 6 — Interests other than shares, debentures, etc.
Division 7 — Title and transfers sections Division 8 — Registration of charges sections Part V Management and Administration sections Division 1 — Office and name sections Division 2 — Directors and officers sections Division 3 — Meetings and proceedings sections A Division 4 — Register of members sections Division 5 — Annual return sections Part VI Accounts and Audit Division 1 — Accounts sections Division 2 — Audit sections B.
Part VII sections B Arrangements, Reconstructions and Amalgamations sections B. Part VIII Receivers and Managers sections Judicial Management sections AX Part IX Investigations sections Division 1 — Preliminary sections
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