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Taiwan Supreme Court Rules An Agreement, Free Travel Deemed as Income, Controlled Foreign Company


 


The Taiwan Supreme Court Rules An Agreement to Control a Company by Outsiders as Invalid

The Taiwan Supreme Court made a civil judgment late August, ruling that an agreementthat grants a creditor of a company the power of designating the directors, supervisors, and general managers if the company fails to repay the loan,violates the Principle of Corporate Governance. Therefore, such agreement shall be invalid. According to articles 198, 216 and 29 of the Taiwan Company Act, directors and supervisors shall be elected by shareholders of a company, and managers shall be appointed by a board of directors. According to the Supreme Court, if an agreement interferes with the exercise of the Principle of Corporate Governance, the agreement shall be in principle invalid. In this case, a party, who is not a shareholder of the company, makes an agreement with the company. The agreement provides conditions on the number of board seats and designation of directors, supervisors, or general managers. The Supreme Court rules that such agreement violates the laws on the power of electing directors, supervisors, and general managers and cause harm to the system of corporate governance. Therefore, such agreement violates public order and shall be invalid. Source : Lawbank Website


 


Free Travel to Specific Employees Shall Be Deemed Income


The National Taxation Bureau of Taipei, Ministry of Finance, announced that free travel offered by a company to specific employees shall be deemed income of such employees. According to National Taxation Bureau of Taipei, expenses of a company for an outing available to all employees could be exempt from the income of the employees. However, if an outing (free travel) is only available to certain employees, such expenses shall be deemed income of such employees. If a company that provides free travel to specific employees has an Employees' Welfare Committee, the Committee shall report to the tax office on behalf of the employees. However, if there is no such Committee, the employees shall report the expenses of free travel as their own income by themselves.

Source : Lawbank Website

 

The Rule of Controlled Foreign Company will be Valid from 2023


A female employee informed the company of her pregnancy during probation period. The Company terminated her employment on the next day based on the reasons that she was incapable of performing her duty and she took leave without notifying the company in advance. The Supreme Court rules that if an employer treats a pregnant employee differently with no respect of retirement, termination or layoff because of her pregnancy, such differential treatment is in violation of law. The employer bears the burden of proof, showing that such treatment is not related to pregnancy. In this case, the incapability report of the female employee was made by the company after she informed the company of her pregnancy. As a result, the Supreme Court ruled that the company fails to prove that such termination is unrelated to her pregnancy.

Source : Lawbank Website