Taiwan faces many challenges brought about by the rise of new economic development models, vigorous growth among startup enterprises, and the economic transformation such changes entail. In response, the Legislative Yuan passed amendments to the Company Act on July 6 of this year. The amendments touch on 148 of the law's 449 articles, marking the greatest remaking of the Company Act in a decade. The changes are principally concentrated in three areas: providing greater flexibility, expanding paperless operations and internationalization, and strengthening corporate governance. The overarching goal is to create a quality and supportive environment for commercial activity and startup operations in Taiwan.
Six key changes
◆ Creating a friendly environment for startups: The amendments seek to incorporate social responsibility into business operations, and allow companies to issue non-par-value stock, as well as permit non-public companies to issue preferred shares.
◆ Increasing operational flexibility for businesses: Changes include loosening rules on the number of board members, expanding the methods by which companies can financially reward employees, and allowing the issuance of paperless shares.
◆ Protecting the rights of shareholders: Amended provisions relax conditions under which a special shareholder meeting may be called, and protect the rights of shareholders to raise proposals and make board nominations.
◆ Strengthening corporate governance: Procedures for convening a meeting of the board have been simplified, an enforcement mechanism has been created to uphold the rights of a convener of a shareholders meeting, and the process for shareholders to make board nominations has been streamlined.
◆ Responding to evaluations by the Asia/Pacific Group on Money Laundering: Reporting requirements for board directors and shareholders have been added, and the bearer share system has been abolished.
◆ Connecting with the international community: Special conditions for the recognition of foreign corporate entities have been eliminated, and companies may now register names in a foreign language in addition to Chinese.