What is the main source of law authorising this entity form?

The Company Act.

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

A company limited by shares has legal personality.

(Maximum) period of existence

There is no maximum period of existence.

Governing document(s)

A company limited by shares is governed by the Company Act, its articles of incorporation (the "Articles") and bylaws.

Liability of incorporators / shareholders

The liability of incorporators/shareholders of a company limited by shares is limited to the amount of share capital, and incorporators/shareholders are not personally liable for the debts of a company limited by shares, except that (i) incorporators shall be jointly and severally liable for debts of the company incurred prior to incorporation; and (ii) shareholders may be liable in the event that the doctrine of piercing the corporate veil as embodied in the Company Act is applied.

(Governing) bodies

Board of directors, supervisors and shareholders' meeting.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

A company limited by shares can be involved in international restructurings such as mergers, asset acquisitions, equity acquisitions, share swap, share exchange and so on.

Can this type of entity be publicly listed or held?

Yes. Only a company limited by shares can be publicly held or listed on the Taiwan Stock Exchange or the Taipei Exchange.

Can this type of entity be used for a non-profit or charitable organization?

A company limited by shares cannot be used as a non-profit or charitable organization.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

• A power of attorney (notarized or legalized), certificate of incorporation of the PRC Investor/Foreign Investor and a Memorandum and a Declaration of Non-PRC Investor (if applicable) are required for the FIA application.
• Documents relating to the registered office of the company (including building tax payment receipt, lease agreement, and the landlord's consent letter).
• Minutes of meetings of board of directors/shareholders for election of directors/chairman of board/supervisors.
• Identification documents and consent letters of the incorporators, shareholders, directors and supervisors, as applicable (e.g., certificate of incorporation, passport).
• The Articles (which must set forth, among others, the intended business items).
• CPA's verification report on the paid-in capital.

Involvement of notary, company register, governmental authorities

An incorporation application shall be filed with the Ministry of Economic Affairs (“MOEA”; “經濟部”) or the relevant municipal city government authorities. For (i) a PRC (China) investor (as defined under Taiwan law (a “PRC Investor”); or (ii) a foreign investor other than a PRC Investor ("Foreign Investor"), an application for a Foreign Investment Approval ("FIA") with the Investment Commission (“IC”; “投資審議委員會”) of the MOEA, prior to the incorporation application, and a fund verification report to the IC, after the remittance of capital into Taiwan, are required. The summary below is prepared based on the assumption that an FIA is required.

Timing (estimate)

It usually takes 6 to 8 weeks for a Foreign Investor to obtain FIA and complete the incorporation.

Main costs, including registration and similar fees (excluding legal fees)

The main costs are the lawyers/CPA fees and registration fee (1/4,000 of the paid-in capital).

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

Business scope must be codified and registered with the MOEA.

If any special license is required for the intended business, application for the special licenses with the relevant competent authorities and additional time would be required.

Minimum number of incorporators / shareholders and residency requirements

At least one corporate incorporator/shareholder or two individual incorporators/shareholders. A company incorporated by and/or invested in by a PRC Investor can only engage in the businesses on the “Positive List” promulgated by the MOEA, and a company incorporated/invested by a Foreign Investor cannot engage in the businesses on the “Negative List” promulgated by the MOEA.

Minimum number of directors (or other applicable officers) and residency requirements

At least one director and one supervisor. A company that is solely-owned by a corporate shareholder is allowed to have no supervisor. In general, there are no nationality/residency requirements, except for the restrictions on PRC nationals/entities.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

No minimum paid-in capital requirement as long as the amount is sufficient to cover incorporation costs; however, (i) if a foreign citizen will be employed as the General Manager, the minimum paid-in capital is NT$500,000, or (ii) if a foreign citizen will be employed in a position other than the General Manager, the minimum paid-in capital is NT$5,000,000. Additional minimum capital requirements may apply depending on the business(es) to be operated by the company. Opening a bank account is required in order for the incorporator to inject the capital.

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

A representative of the incorporator, who shall be the chairman of the company after incorporation, may be required (i) to open the bank account in person; and/or (ii) to visit the tax authority in person after incorporation for a brief interview with the tax authority on the operation of the company.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

The MOEA/competent municipal city government will grant a unified business number to a company upon the approval of incorporation. After the incorporation, a company shall apply for business registration with the tax authority and the tax authority will assign a tax identification number (VAT number).

What is the title of the applicable company registry?

The competent registry could be the MOEA (經濟部) or the relevant municipal city government authorities, depending on the amount of paid-in capital and the location of the registered address of the company. For a company with a paid-in capital more than NT$500 million, the competent registry shall be the MOEA, regardless the location of such company.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The following items must be filed with the MOEA and most of which are publicly available:

• Articles
• Incorporation date
• Company name and address
• Investment status (i.e. invested by local investor(s), Foreign Investor(s) or PRC Investor(s))
• Authorized capital and paid-in capital
• Par value (if applicable) and number of total shares
• Items of business scope
• Operation status (e.g. active, suspended, dissolved, or liquidated)
• Office term of directors and supervisors
• Name of and shares held by the directors and the supervisors, and the corporate shareholders represented by the directors/supervisors (if applicable)
• ID/passport number, nationality and address of the directors and the supervisors (not publicly available)
• Relevant information of the branch(es) of the company (if available).

In addition to the above, name, nationality, date of birth/incorporation date, ID/passport number of and number of shares held by the directors, supervisors and shareholders holding over 10% of a company's total outstanding shares must be uploaded to a platform set up by the MOEA every year or within 15 days after any change of such information (not publicly available).

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The board of directors (董事會). The board of directors is in charge of the operation of the business, except for the matters stipulated by the Company Act and Articles that must be resolved by a shareholders' meeting.

How are the members of the executive body appointed, dismissed and replaced?

For a company with more than one shareholder, the directors shall be elected/dismissed/replaced by the shareholders' meeting. For a company with a sole corporate shareholder, the directors shall be designated/dismissed/replaced by the sole shareholder. Any change of director must be registered with the competent registry.

Is it possible to appoint corporate directors or must all directors be natural persons?

Yes. A corporate director must designate an individual to perform the director’s duties.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

A company limited by shares may elect managing directors (常務董事). For a company that elects managing directors, the board of managing directors shall elect the Chairman and vice Chairman of the board of directors

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

Shareholders' meeting (股東會). The main tasks of the shareholders' meeting are those expressly stipulated by the law or the Articles, including amending the Articles, electing directors and supervisors, approving annual financial statements, profit distribution, capital reduction, major transactions such as a merger or spin-off, listing or delisting, dissolution and liquidation, etc.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Under a private company context:

• An ordinary resolution shall be adopted by a majority vote of the shareholders present at the meeting. The quorum for an ordinary resolution is the presence of shareholders holding more than one-half (1/2) of the total issued and outstanding voting shares.
• An extraordinary resolution shall be adopted by a majority vote of the shareholders present at the meeting. The quorum for an extraordinary resolution is the presence of shareholders holding two-thirds (2/3) or more of the total issued and outstanding voting shares.

The Articles of a company may stipulate higher quorum and/or voting requirements only for the matters specified under the Company Act.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Publicly-held or listed companies are subject to additional governance regimes.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

The company must maintain its accounting records. The board of directors must prepare the annual financial statements after the end of each accounting period, submit the financial statements to the supervisor(s) for their review 30 days before the annual shareholders' meeting, and then submit the financial statements to the annual shareholders' meeting for its approval, which shall be convened within 6 months from the end of each fiscal year.

Publicly-held or listed companies are subject to additional rules and shall submit their financial statements to the Financial Supervisory Commission (金融監督管理委員會).

Is the entity permitted to determine its own financial year?

Yes.

Is the entity subject to any statutory (external) auditor obligations?

The financial statements of a company with a paid-in capital of NT$30 million or more, or an annual net sales revenue of NT$100 million or more, or having 100 or more employees, or a publicly-held company, shall be audited by a CPA.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

Generally, not for a private company.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

A company may issue ordinary shares and different classes of preferred shares. The preferred shares could be vested with the preferential rights and/or subject to certain restrictions to the extent permitted by law, e.g. multiple voting rights, veto rights, priority to receive dividends, the right to be elected as a director, share transfer restrictions, etc. The rights and restrictions of the preferred shares must be clearly stipulated in the Articles.

What documentation is required for the transfer of ownership interests?

For a company that issues share certificates, the endorsement of share certificates by the assignor, assignee and the company is required for the transfer of the shares.

Preferred shares may be subject to transfer restrictions as set forth in the Articles.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The name and address of the transferee of the shares shall be provided to the company and recorded in the shareholders' roster.

Are there any applicable stamp duties imposed when transferring ownership interests?

For a company that issues share certificates, the transfer of shares is subject to securities transaction tax at 0.3% of the transfer price.

How are shares issued? (including information on payment obligations, registration requirements)

Issuance of new shares within the authorized share capital must be approved by a board resolution with a majority vote at a meeting attended by two-thirds (2/3) or more of the directors.If the new shares to be issued exceed the authorized share capital as set forth in the Articles, the amendment to the authorized share capital/Articles must be approved by a shareholders' meeting with an extraordinary resolution.

Capital increase must be registered with the registry after new shares are issued.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

An incorporator/shareholder can contribute assets and technologies necessary for the company's operation to subscribe shares. A shareholder can also capitalize the account receivables owing by the company. The value of the non-cash payment must be approved by the board of directors' meeting and verified by a CPA. For a private company, an external appraisal report is not statutorily required, but in practice, a CPA generally would require an external appraisal report for the purpose of verifying the value of the non-cash payment.

The concept of share premium contributions made by the existing shareholders without receiving/issuing new shares is not applicable under Taiwan law.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Share cancellation and repurchase is possible if the requirements under the Company Act are met.

Capital reduction must be approved by the shareholders' meeting with an extraordinary resolution.

Any requirements with respect to distributions to shareholders?

A company may not distribute dividends until payment of all tax, making up of losses, and setting aside a legal reserve.

The annual profit distribution proposal shall be prepared by the board of directors and approved by the supervisors and the shareholders' meeting.

If the Articles provide that a company may distribute profit on a quarterly or semi-annually basis, the board of directors must prepare and submit the quarterly/semi-annual distribution proposal to the supervisors for their approval, and then the board of directors shall approve the same.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes, but the provisions in a shareholders agreement only entail contractual obligation among the shareholders.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Main maintenance costs include:

• Convening board meetings (or adopting a written resolution if the Articles so allow) and shareholders' meetings.
• Keeping books and records and preparing financial statements.
• Filing tax returns.
• Maintaining registered office.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

Corporate income tax rate for 2021:

• Taxable income up to NT$120,000: 0%
• Taxable income exceeding NT$120,000: 20%; provided however, that the income tax payable should be no more than 50% of the portion of taxable income exceeding NT$120,000.
• Various exemptions and special rules may apply.

Summary of any specific matters, e.g. recent or prospective major legal developments

The Company Act was extensively amended in 2018 to offer more flexibility to a company limited by shares in terms of corporate governance. No major legal developments relating to the Company Act are expected in 2021.