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New policies regarding Directors, Shareholders, and Chairman.



 

Directors are entitled to request the company to provide information to the extent necessary to perform their duties.

A director of a hospital said that he had the authority to review the relevant documents of the hospital in detail for the performance of his duties as director, but he was unable to check the financial information because of the obstruction of the chairman. The chairman argued that in order to preserve the independence of the hospital, directors should not interfere the independence by examining the financial documents. Even if the directors are allowed to review documents, it should be limited to documents listed under Article 210 of the Company Act, i.e. financial statements. Only supervisors can examine and copy financial related information pursuant to Article 217 of the Company Act. Recently, the Kaohsiung Branch of the High Court of Taiwan ruled that based on Article 23 of the Company Act and Article 535 of the Civil Code, directors owe fiduciary duties to the company, and fiduciary duties should not be excluded for hospitals. Thus, directors are entitled to request, examine and copy company’s information to the extent necessary for them to reasonably perform their duties as director, which is not limited to the scope under Article 210 of the Company Act. In addition, the High Court stated that directors should keep the information confidential and can only use them reasonably based on the duty of loyalty and care. However, the High Court also indicated that if the company can provide evidence to prove that the information is irrelevant or unnecessary to the director’s duties, or that the directors’ request to review or copy the information is based on an illegitimate purpose, the company may refuse to provide the information.

Source : Lawbank Taiwan



 


 

As long as shareholders are registered on the shareholder roster, the company should not claim that the shareholder do not exist.

The Taiwan High Court ruled that a company limited by shares is composed of shareholders that change frequently. If shareholders rosters are not used as the standard, the legal relationship between the shareholders and the company will become complicated. Therefore, anyone who is registered as a shareholder in the shareholders rosters, even if he/she does not hold the company's shares, the shareholder can still claim that he/she is qualified as a shareholder and exercise the rights of a shareholder. The High Court further explained that if a third-party claims to the company that he/she is the owner of the shares, this will be a dispute between the third party and the registered shareholder, which shall be resolved through a separate litigation. Before the third party presents the final judgment to the company and requests the company to record his name in the shareholder roster, the company shall not claim the registered shareholders do not enjoy the rights as shareholder. Even if the company is aware of a transfer of shares between shareholders, before any change is made on the shareholders roster, the shareholder listed on the shareholders roster should be treated as shareholder and the shareholders meeting notice should be sent to the shareholder listed on the shareholders roster. Source : Lawbank Taiwan


 


 

Transaction conducted in good faith by a chairman, cannot be denied the effectiveness .

According to the Company Act, the chairman of the board of directors represents the company externally. The Company Act also stipulates that the implementation of the company's business shall be implemented by the resolution of the board of directors, unless such matters are reserved to be resolved by the shareholders' meeting as stipulated in law or the articles of incorporation. However, a counter-party to the transaction has no way of knowing how the company authorizes the chairman to execute the company's business internally, and whether the specific transaction conducted by the chairman has been resolved by the board of directors, and whether the resolution is flawed. The scope of authority of the chairman imposed by the company is no different from the company's internal restriction on the chairman's representation. In order to ensure transaction safety, if a transaction conducted by a chairman on behalf of a company is conducted in good faith with a bona fide third party, the company shall not deny the authority of the chairman or challenge the effectiveness of the transaction simply because the board of directors has not made a resolution in such regard, or the resolution is flawed. The so-called bona fide third party refers to the counter-party of the transaction who is not aware that the chairman has no authority to conduct the transaction.

 



 

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