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.

Other particularities

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions 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, or its securities be issued to members of the public?

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 organisation.

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

Main documents required

Under Taiwan law, (i) a PRC (China) investor (as defined under Taiwan law) (PRC Investor); and (ii) a foreign investor other than a PRC Investor (Foreign Investor) are subject to different regulatory schemes. 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 Ministry of Economic Affairs (MOEA), and a company incorporated by and/or invested in by a Foreign Investor cannot engage in the businesses on the "Negative List" promulgated by the MOEA. This business entities guide only presents the regulatory scheme applicable to Foreign Investors. A Foreign Investor must (i) first apply for and obtain a Foreign Investment Approval (FIA) from the Department of the Investment Review (DIR) of the MOEA and file a fund verification report to the DIR after the remittance of capital into Taiwan; and (ii) apply for incorporation registration with the MOEA or the competent municipal city government authorities. The summary below is prepared based on the assumption that an FIA is required.

Involvement of notary, company register, governmental authorities

A power of attorney (notarised or legalised), certificate of incorporation of the Foreign Investor and a Memorandum and a Declaration of Non-PRC Investor (if applicable).

Documents relating to the registered office of the company (including building tax payment receipt, lease agreement, and the landlord's consent letter).

Corporate authorization documents for the appointment/election of directors/chairman of board/supervisors.

Identification documents (ID) and consent letters of the incorporators, shareholders, directors, and supervisors, as applicable (e.g. certificate of incorporation, passport etc.).

The Articles (which must set forth, among other things, the intended business to be conducted).

CPA's audit report on the paid-in capital.

Timing (estimate)

It usually takes six (6) to eight (8) weeks for a Foreign Investor to obtain a FIA and another four (4) weeks to complete the incorporation.

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

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

The business scope must be codified and registered with the MOEA.

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

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

Minimum number of incorporators / shareholders and residency requirements

At least one (1) corporate incorporator/shareholder or two (2) individual incorporators/shareholders.

In general, there are no nationality/residency requirements, except for the restrictions on PRC nationals/entities.

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

At least one (1) director and one (1) 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)

There is 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 as 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 conducted 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/shareholders required in the jurisdiction for incorporation, formation, or organisation?

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 government unified invoice number to a company upon the approval of incorporation. After the incorporation, a company must 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 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 of NT$500 million or more, the competent registry will 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 company registrar, 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)).
• Authorised capital and paid-in capital.
• Par value (if applicable) and number of total shares.
• Items of business scope.
• Operational status (e.g. active, suspended, dissolved, or liquidated).
• Term of office of directors and supervisors.
• Names 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 on 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 and also 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.

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. However, 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. For a company that elects managing directors, the board of managing directors shall elect the Chairman and Vice Chairman of the Board of Directors and shall exercise the duty of the Board of Directors during the recess 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.

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 is 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 of the total issued and outstanding voting shares.
• An extraordinary resolution is 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 or more of the total issued and outstanding voting shares.

The Articles of a company may stipulate higher quorum and/or voting thresholds only for the matters that higher quorum and/or voting thresholds are expressly allowed 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. The annual shareholders' meeting must be convened within six (6) months from the end of each fiscal year.

Publicly held or listed companies are subject to additional rules and must submit their financial statements to the Financial Supervisory Commission.

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, must 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 can be vested with preferential rights and/or be 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 must 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 a 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 authorised share capital must be approved by a board resolution with a majority vote at a meeting attended by two-thirds or more of the directors.

If the new shares to be issued exceed the authorised share capital as set forth in the Articles, the amendment to the authorised share capital/Articles must be approved by a shareholders' meeting with an extraordinary resolution.

Capital increases 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 for shares. A shareholder can also capitalise on 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 an existing shareholder 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 are 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 without the payment of all tax, making up of losses, and setting aside a legal reserve.

The annual profit distribution proposal must 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-annual basis, the Board of Directors must prepare and submit the quarterly/semi-annual distribution proposal to the supervisors for their approval, before the Board of Directors may 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 shareholder's agreement may only entail contractual obligations 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 the registered office.

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

For a company limited by share with an annual taxable income of more than NT$200,000, the corporate income tax rate is 20%. There are various exemptions and special rules that 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 2024.