Taiwan Companies Act
(Articles 201 to 250)
Article 201
When the number of vacancies in the board of directors of a company equals to one third of the total number of directors, the board of directors shall call, within 30 days, a special meeting of shareholders to elect succeeding directors to fill the vacancies.
However, in the case of a company whose shares are issued to the public, the special meeting of shareholders for electing succeeding directors shall be convened by the board of directors within 60 days.
Article 202
Business operations of a company shall be executed pursuant to the resolutions to be adopted by the board of directors, except for the matters the execution of which shall be effected pursuant the resolutions of the shareholders?meeting as required by this Act or the Articles of Incorporation of the company.
Article 203
Meetings of the board of directors shall be convened by the chairman of the board of directors, except for the first meeting of each term of the board of directors which shall be convened by the director who received a ballot representing the largest number of votes at the election of directors.
The first meeting of each term of the board of directors shall be convened within 15 days after the re-election. However, in case the re-election of directors was conducted prior to the expiration of the term of office of the directors of the preceding term, and a resolution was adopted not to discharge the directors of the preceding term until the expiration of the term of their offices as directors, the first meeting of the newly elected directors shall be convened within 15 days after expiration of the term of office of the directors of the preceding term.
Where directors are elected prior to the expiration of the term of office of the directors of the preceding term, and a resolution is adopted not to discharge the directors of the preceding term until the expiration of the term of office of the preceding term, the chairman, the vice chairman and the managing directors of the newly elected board of directors may be carried out prior to the expiration of the term of office of the directors of the preceding term, free from the binding of the provisions of the preceding Paragraph.
Where the number of directors attending the first meeting of the newly elected board of directors is less than the minimum quorum of the meeting of the board of directors convened for election of the chairman and the managing directors of the board of directors, then the original convener shall resume the meeting within 15 days to conduct the election, and may apply the resolution adopting method set forth in Article 206 of this Act.
In case the director elect receiving the a ballot representing the largest number of votes fails to convene the meeting of the board of directors within the time limit set out in Paragraph II or the preceding Paragraph of this Article, then one-fifth (1/5) or more of the directors elect may convene the meeting on their own, with a prior permission of the competent authority.
Article 204
In calling a meeting of the board of directors, a notice setting forth therein the subject(s) to be discussed at the meeting shall be given to each director and supervisor no later than 7 days prior to the scheduled meeting date. However, in the case of emergency, the meeting may be convened at any time.
Article 205
Each director shall attend the meeting of the board of directors in person, unless as otherwise provided for in the Articles of Incorporation that a director may be represented by another director.
In case a meeting of the board of directors is proceeded via visual communication network, then the directors taking part in such a visual communication meeting shall be deemed to have attended the meeting in person.
In case a director appoints another director to attend a meeting of the board of directors in his/her behalf, he/she shall, in each time, issue a written proxy and state therein the scope of authority with reference to the subjects to be discussed at the meeting.
A director may accept the appointment to act as the proxy referred to in the preceding Paragraph of one other director only.
A director residing in a foreign country may appoint in writing a shareholder residing in the national territory as his/her proxy to attend the meetings of the board of directors on a regular basis.
Appointment of the proxy in accordance with the provisions of the preceding Paragraph shall be registered with the competent authority; and this requirement shall also apply to the change of the proxy.
Article 206
Unless otherwise provided for in this Act, resolutions of the Board of Directors shall be adopted by a majority of the directors at a meeting attended by a majority of the directors.
The provisions of Article 178 and Article 180, paragraph 2 shall apply mutatis mutandis to the aforesaid resolutions.
Article 207
Minutes shall be taken of the proceedings of the meeting of the board of directors.
The provisions of Article 183 shall apply mutatis mutandis to the aforesaid minutes.
Article 208
In case a company has no managing directors, the board of directors shall elect a chairman of the board directors from among the directors by a majority vote at a meeting attended by over two-thirds of the directors, and may also elect in the same manner a vice chairman of the board in accordance with the provisions of the Articles of Incorporation.
In case a company has managing directors, the managing directors shall be elected from among the directors in accordance with the manner set forth in the preceding Paragraph provided that the number of managing directors shall not be less than three persons but not more than one-third of the total number of directors. The chairman or the vice chairman of the board shall be elected from the managing directors in accordance with the same manner set forth in the preceding Paragraph.
The chairman of the board of directors shall internally preside the shareholders?meeting, the meeting of the board of directors, and the meeting of the managing directors; and shall externally represent the company. In case the chairman of the board of directors is on leave or absent or cannot exercise his power and authority for any cause, the vice chairman shall act on his behalf. In case there is no vice chairman, or the vice chairman is also on leave or absent or unable to exercise his power and authority for any cause, the chairman of the board of directors shall designate one of the managing directors, or where there is no managing directors, one of the directors to act on his behalf. In the absence of such a designation, the managing directors or the directors shall elect from among themselves an acting chairman of the board of directors.
During the recess of the board of directors, the managing directors shall regularly exercise the power and authority of the board of directors in accordance with the provisions of laws and regulations and the Articles of Incorporations of the company, and the resolutions adopted by the shareholders?meetings and the meetings of the board of directors by conferences to be called from time to time by the chairman of the board of directors; with the resolutions to be adopted by a majority of managing directors present at such conferences attended by a majority of managing directors.
The provisions set out in Article 57 and Article 58 hereof shall apply mutatis mutandis to directors representing the company.
Article 208- 1
In case the board of directors fails or is unable to exercise its power and authority to the extent which is likely to cause damage to the company, the court may, at the petition of interested party or parties or a public prosecutor, appoint one or more temporary manager to exercise the power and authority of the chairman of the board of directors and the board of directors instead provided, however, that he/she shall not commit any act unfavorable to the company.
Upon appointment of the temporary manager under the preceding Paragraph, the court shall request the competent authority to make appropriate registration of such appointment.
Upon discharge of the temporary manager appointed hereunder, the court shall request the competent authority to cancel the registration of his appointment.
Article 209
A director who does anything for himself or on behalf of another person that is within the scope of the company’s business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
The aforesaid approval shall be given upon a resolution adopted by a majority of the shareholders present who represent two-thirds or more of the total number of its outstanding shares.
For a company whose share certificates have been publicly issued, if the total number of shares represented by shareholders present at a shareholders?meeting is not sufficient to meet the criteria specified in the preceding paragraph, the resolution may be adopted by a large majority of two thirds of the voting powers of the shareholders present at a shareholders?meeting who present a majority of the total number of issued shares.
Where stricter criteria for the total number of shares represented by the attending shareholders and the required number of votes at the shareholders?meeting set forth in the preceding two paragraphs are specified in the Articles of Incorporation, such stricter criteria shall govern.
In case a director does anything for himself or on behalf of another person in violation of the provisions of Paragraph 1, the meeting of shareholders may, by a resolution, consider the earnings in such an act as earnings of the company unless one year has lapsed since the realization of such earnings.
Article 210
Subject to the provisions otherwise provided for by the authority in charge of securities affairs, the board of directors shall keep at the head office of the company copies of the Articles of Incorporation, the minutes of every meeting of the shareholders and the financial statements, and shall keep at the head office of the company or the business office of its securities agent the shareholders roster and the counterfoil of corporate bonds issued by the company.
Any shareholder and any creditor of a company may request at any time, by submitting evidentiary document(s) to show his/her interests involved and indicating the scope of interested matters, an access to inspect and to make copies of the Articles of Incorporation and accounting books and records.
The director(s) authorized to represent the company who has(have) violated the provisions set out in Paragraph I hereinabove by not making the financial statements and the Articles of Incorporation available at the office of the company, or has(have) violated the provisions of the preceding Paragraph by refusing the examination or copying of relevant information without good cause shown shall be imposed with a fine not less than NT$ 10,000 but not more than NT$ 50,000.
Article 211
In case the loss incurred by a company aggregates to one half of its paid-in capital, the board of directors shall convene and make a report to a meeting of shareholders.
Subject to the provisions set out in Article 282 of this Act, in case the assets of a company is insufficient to set off its liabilities, the board of directors shall apply to the court for pronouncement of its bankruptcy.
The director(s) authorized to represent the company who has (have) violated the provisions of the preceding two Paragraphs shall be imposed with a fine of not less than NT$ 20,000 but not more than NT$ 100,000.
Article 212
In case the shareholders?meeting of a company resolves to institute an action against a director, the company shall, within 30 days from the date of such resolution, institute the action.
Article 213
In case of a lawsuit between the company and a director, the supervisor shall act on behalf of the company, unless otherwise provided by law; and the meeting of shareholders may also appoint some other person to act on behalf of the company in a lawsuit.
Article 214
Shareholder(s) who has/have been continuously holding 3% or more of the total number of the outstanding shares of the company over one year may request in writing the supervisors of the company to institute, for the company, an action against a director of the company.
In case the supervisors fails to institute an action within 30 days after having received the request made under the preceding Paragraph, then the shareholders filing such request under the preceding Paragraph may institute the action for the company; and under such circumstance, the court may, at the petition of the defendant, order the suing shareholders to furnish an appropriate security. In case the suing shareholders become the loser in that lawsuit and thus causing any damage to the company, the suing shareholders shall be liable for indemnifying the company for such damage.
Article 215
Where a lawsuit instituted under paragraph 2 of the preceding article is found by a final judgment to be based on facts apparently untrue, the shareholders who instituted the action shall be liable to compensate the defendant director for loss or damage resulting from such an action.
Where a lawsuit instituted under paragraph 2 of the preceding article is found by a final judgment to be based on facts apparently true, the defendant director shall be liable to compensate the shareholders who instituted the action for loss or damage resulting from such an action.
Section 5 Supervisors
Article 216
Supervisors of a company shall be elected by the meeting of shareholders, among them at least one supervisor shall have a domicile within the territory of the Republic of China.
For a company whose shares are issued to the public, there must be two or more supervisors to be elected in accordance with the provision of the preceding Paragraph, and the total shareholdings of all supervisors shall meet the requirement as separately specified by the authority in charge of securities affairs, if any.
The relation between the company and its supervisors shall be subject to the provisions governing the mandate as stipulated in the Civil Code.
The provisions set out in Article 30, and Paragraph I and Paragraph III regarding the disposing capacity, Article 192 of this Act shall apply mutatis mutandis to the supervisors.
Article 216- 1
Where the candidates nomination system is adopted by a company which has issued shares to the public in its Articles of Incorporation for election of supervisors, the provisions set out in Article 192-1 of this Act shall apply mutatis mutandis.
Article 217
The term of office of a supervisor shall not exceed three years, but he may be eligible for re-election.
In case election of new supervisors cannot be effected in time after expiration of the term of office of existing supervisors, the existing supervisor shall continue to perform their duties until the new supervisors elect has assumed their office as supervisors. However, the competent authority may order, ex officio, the company to conduct the re-election of supervisors within a given time limit. If election of new supervisors is still not effected, the existing supervisors shall be discharged, ipso facto, upon expiry of the time limit hereinabove fixed by the competent authority.
Article 217- 1
In case all supervisors of a company are discharged, the board of directors shall, within 30 days, convene a special meeting of shareholders to elect new supervisors. However, for a company whose shares are issued to the public, the special meeting of shareholders for election of supervisors shall be convened by the board of directors within 60 day.
Article 218
Supervisors shall supervise the execution of business operations of the company, and may at any time or from time to time investigate the business and financial conditions of the company, examine the accounting books and documents, and request the board of directors or managerial personnel to make reports thereon.
In performing their functional duties under the preceding Paragraph, the supervisors may appoint, on behalf of the company, a practicing lawyer and a certified public accountant to conduct the examination.
Any person who violated Paragraph I by hindering, refusing or evading the examination to be conducted by supervisors shall be imposed with a fine of not less than NT$ 20,000 but not more than NT$ 100,000.
Article 218- 1
When a director discovers the possibility that the company will suffer substantial damage, he shall report to the supervisor immediately.
Article 218- 2
Supervisors of a company may attend the meeting of the board of directors to their opinions.
In case the board of directors or any director commits any act, in carrying out the business operations of the company, in a manner in violation of the laws, regulations, the Articles of Incorporation or the resolutions of the shareholders?meeting, the supervisors shall forthwith advise, by a notice, to the board of directors or the director, as the case may be, to cease such act.
Article 219
Supervisors shall audit the various statements and records prepared for submission to the shareholders?meeting by the board of directors, and shall make a report of their findings and opinions at the meeting of shareholders.
In performing their functional duties under the preceding Paragraph, the supervisors may appoint a certified public accountant to conduct the auditing in their behalf.
Supervisors who violated the preceding Paragraph by making false report shall each be imposed with a fine in an amount not more than NT$ 60,000.
Article 220
Subject to the condition that the board of directors does not or is unable to convene a meeting of shareholders, the supervisors may, for the benefit of the company, call a meeting of shareholders when it is deemed necessary.
Article 221
Supervisor may each exercise the supervision power individually.
Article 222
A supervisor shall not be concurrently a director, a managerial officer or other staff/employee of the company.
Article 223
In case a director of a company transacts a sales with, or borrows money from or conducts any legal act with the company on his own account or for any other person, the supervisor shall act as the representative of the company.
Article 224
In case a supervisor has, in performing his functional duties, violated the provisions of any law, regulations, or the Articles of Incorporation of the company, or was negligent of his duties and thus causing any damage to the company, he shall be liable for indemnifying the company for such damage.
Article 225
When a meeting of shareholders resolves to institute an action against a supervisor, the company shall institute such action within 30 days from the date of adoption of such resolution.
The person who represents the company in the action instituted under the preceding Paragraph may be appointed by the shareholders?meeting from the persons other than the directors of the company.
Article 226
In case supervisor is liable to compensate the company or a third party and a director is also liable, such supervisor and director shall be joint debtors.
Article 227
The provisions set out in Article 196 to 200, Article 208-1, Article 214 and Article 215 hereof shall apply mutatis mutandis, to the supervisors provided, however, that the request to be submitted to supervisors under Article 214 hereof shall be submitted to the board of director.
Section 6 Accounting
Article 228
At the close of each fiscal year, the board of directors shall prepare the following statements and records and shall forward the same to supervisors for their auditing not later than the 30th day prior to the meeting date of a general meeting of shareholders:
1. the business report;
2. the financial statements; and
3. the surplus earning distribution or loss off-setting proposals.
The financial statements and records as required in the preceding Paragraph shall be prepared in accordance with the rules prescribed by the central competent authority.
Supervisors may request the board of directors to provide in advance the financial statements and records for auditing as required in Paragraph I hereinabove.
Article 229
The statements and records of accounts prepared by the Board of Directors and the report made by the supervisors shall be made available at the head office for inspection at any time by the shareholders, ten days prior to the regular meeting of shareholders.
The shareholders may bring their lawyers or certified public accountants for such an inspection.
Article 230
The board of directors shall submit the various financial statements and records prepared by it to the general meeting of shareholders for its ratification; and after the ratification thereof by the general meeting of shareholders, shall distribute to each shareholder the copies of ratified financial statements and the resolutions on the surplus earning distribution and/or loss offsetting.
For a company whose shares are issued to the public, the distribution of the ratified financial statements and the resolutions on the surplus earning distribution and/or the loss offsetting to its shareholders holding the registered share certificates in a number less than 1,000 shares may be effected by way of a public notice.
Any creditor of the company may request the company to provide him the financial statements and records and the resolutions set forth in Paragraph I hereinabove or to allow him to make copies thereof.
The director authorized to represent the company who has violated the provisions of Paragraph I of this Article by failing to distribute the financial statement and records and the resolutions shall be imposed with a fine of not less than NT$ 10,000 but not more than NT$ 50,000.
Article 231
Only after all the statements and records of accounts have been approved by the meeting of shareholders shall directors and supervisors be deemed to have been discharged from their liabilities, except in the event of any unlawful conduct on the part of directors or supervisors.
Article 232
A company shall not pay dividends or bonuses, unless its losses shall have been covered and a legal reserve shall have been set aside in accordance with the provisions of this Act.
A company shall not pay dividends or bonuses, if there is no surplus earnings provided, however, that the aggregate of its legal reserve exceeds fifty per cent (50%) of its paid-in capital.
The responsible person(s) of a company who violates the provisions of the preceding two Paragraphs by making distribution of dividends and bonuses shall (each) be punished with imprisonment of not more than one year, detention, and a fine in lieu thereof or in addition thereto in an amount of not more than NT$ 60,000.
Article 233
If a company pays dividends and bonuses in violation of the provisions of the preceding article, creditors of the company may request rescission and may also claim for compensation for loss or damage resulted there-from.
Article 234
A company which according to the nature of its business requires more than two years of preparation from the date of its incorporation before it can commence business, may, with the approval of the competent authority, make distribution of dividends in accordance with the provisions of its Articles of Incorporation.
The amount of the aforesaid dividends for distribution may be included as pre-paid dividends under the account of shareholder’s equity to be shown in the balance sheet of the company. After commencing its business operation, whenever the total amount of dividends and bonuses to be distributed each time exceeds six per cent (6%) of its paid-in capital, then the amount of such excessive distribution shall be offset against the aforesaid pre-paid dividends.
Article 235
Unless otherwise provided for in the Articles of Incorporation, distribution of the dividends and bonuses shall be effected in proportion to the number of shares held by each shareholder accordingly.
The percentage of surplus profit distributable as employees?bonus shall be definitely specified in the Articles of Incorporation, unless otherwise approved specifically by the central authority in charge of the end-enterprise concerned.
The provisions set out in the preceding Paragraph shall not be applicable to the government operated enterprises, except in the case where special approval has been granted by the authority in charge of the government operated enterprise concerned, and the percentage of surplus profit distributable as employees?bonus has been specifically fixed in the Articles of Incorporation.
Qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, entitled to receive share bonus may be specified in the Articles of Incorporation.
Article 236
(Deleted)
Article 237
A company, when allocating its surplus profits after having paid all taxes and dues, shall first set aside ten percent of said profits as legal reserve.
Where such legal reserve amounts to the total authorized capital, this provision shall not apply. Aside from the aforesaid legal reserve, the company may, under its Articles of Incorporation or by resolution of the meeting of shareholders, set aside another sum as special reserve. Responsible persons of the company who fail to set aside legal reserve, in violation of the provisions of Paragraph 1, shall be severally subject to a fine not exceeding NT$60,000.
Article 238
(Deleted)
Article 239
The legal reserve and the capital reserve shall not be used except for making good the deficit (or loss) of the company; however, this clause shall not apply to the case set forth in Article 241 hereof or as otherwise provided for in the law.
A company shall not use the capital reserve to make good its capital loss, unless the surplus reserve is insufficient to make good such loss.
Article 240
A company may, by a resolution adopted by a majority of the shareholders present who represent two-thirds or more of the total number of its outstanding shares of the company, have the whole or a part of the surplus profit distributable as dividends and bonuses distributed in the form of new shares to be issued by the company for such purpose. In case the amount of balance of such distributable surplus profit is less the par value (or a fraction) of one share, it shall be paid in cash.
For a company whose shares are issued to the public, if the total number of shares represented by the shareholders present at a meeting of shareholders is less than the threshold specified in the preceding Paragraph, the resolution may be adopted by a large majority (2/3 or more) vote of the shareholders present at that meeting of shareholders attended by the shareholders representing a majority of the total number of the outstanding shares of the company.
Where a higher threshold of the number of shareholders to be present and the total number of shares the represent is required by the Articles of Incorporation of the company, such higher threshold shall prevail.
Where the distributable bonus is to be capitalized in accordance with the preceding three Paragraphs, the bonus distributable to the employees under the Articles of Incorporation may be paid either in the form of shares newly issued for such purpose or in cash.
Except for a company whose shares are issued to the public and which is subject to the provisions otherwise stipulated by the authority in charge of securities affairs, the resolution to issue new shares under this Article shall take effect upon close of the shareholders?meeting whereat the resolution is adopted, and the board of directors shall forthwith notify each shareholder or cause the number of new shares distributable to the shareholder to be recorded under the name of the pledgee(s) of the said shareholder as registered in the shareholders roster, and shall make a public notice of the distribution, if the shares newly issued are of bearer share certificates, For the distribution of dividends and bonuses in an amount or ratio explicitly specified in the Articles of Incorporation and to be effected by a resolution to be adopted by the board of directors as authorized (by a shareholders?meeting), the whole or a part of the distributable dividends and bonuses may be paid in accordance with the provisions set out in Paragraph I and Paragraph IV of this Article in the form of shares newly issued for such purpose after a resolution has been adopted by a majority of shareholders present at a meeting of the board of directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the shareholders?meeting.
Article 241
Where a company incurs no loss, it may, pursuant to a resolution to be adopted by a shareholders?meeting as required in the preceding Article, capitalize its legal reserve and the following capital reserve, in whole or in part, by issuing new shares which shall be distributable as dividend shares to its original shareholders in proportion to the number of shares being held by each of them:
1.the income derived from the issuance of new shares at a premium;
2.the income from endowments received by the company.
The provisions set out in Paragraph V and Paragraph VI of the preceding Article shall be applicable mutatis mutandis to the capitalization of reserves to be effected under the preceding Paragraph.
Where legal reserve is capitalized, the amount of the legal reserve shall have aggregated up to fifty per cent of the paid-in capital, and only one half of the amount of such legal reserve may be capitalized.
Article 242
(Deleted)
Article 243
(Deleted)
Article 244
(Deleted)
Article 245
Shareholders who have been continuously holding three per cent of total number of the outstanding shares of a company for a period of one year or longer may apply to the court for appointment of inspector to inspect the current status business operations, the financial accounts and the property of the company.
The court may, when it deems necessary based on the report made by the inspector, order the supervisor(s) of the company to convene a meeting of shareholders.
Any person who impedes, refuses or evades the inspection to be conducted by the inspector, or the supervisor(s) who fails to convene a meeting of shareholders as ordered by the court shall be imposed with a fine of not less than NT$ 20,000 but not more than NT$ 100,000.
Section 7 Corporate Bonds
Article 246
A company may, by a resolution adopted by the Board of Directors, invite subscription for corporate bonds, provided that the reasons for the said action as well as other relevant matters shall be reported to the meeting of shareholders.
The aforesaid resolution shall be adopted by a majority of directors at a meeting attended by two-thirds or more of the total number of directors.
Article 246- 1
When a company issues corporate bonds, the company may covenant that the preferential order of the corporate bonds to receive indemnification shall be lower than that of other claims of the company.
Article 247
The total amount of corporate bonds shall not exceed the net remainder of all assets in hands of the company after deducing all liabilities and intangible assets.
The total amount of unsecured corporate bonds shall not exceed one-half of the aforesaid net remainder.
Article 248
When a company plans to issue corporate bonds, an application setting forth therein the following particulars shall be filed with the authority in charge of securities affairs:
1. The name of the company;
2. The total amount of corporate bonds to be issued and the value of each bond;
3. The interest rate payable on the corporate bonds;
4. The method and deadline date for redemption of the corporate bonds;
5. The plan for raising and the method for custody of the funds raised;
6. The purpose for which the funds raised by issuing corporate bonds is to be used, and the plan for using such funds;
7. If corporate bonds have been issued in the past, the amount of such bonds remains unredeemed;
8. The value or the minimum value at which corporate bonds are to be issued;
9. The total number of authorized shares of the company and the total number and the amount of shares actually issued;
10. The amount of balance of all existing assets of the company after deducting all liabilities and intangible assets;
11. The financial statements which should be prepared and submitted pursuant to the requirements of the authority in charge of securities affairs;
12. The name or title of the trustees of all holders of the corporate bonds, and the covenants made in the mandates;
13. The name or title and the address of the bank or the post office to collect payments on behalf of the company;
14. The name or title of the underwriter or the distributing agent(s), if any, and the covenants contained in the mandate;
15. The type, name and evidential documents of the security or collateral, if any, provided for issuing the corporate bonds;
16. The name or title and the evidential documents of the guarantor(s), if any, for the issuance of the corporate bonds;
17. The facts or the current status of previous contract violating act or delay in payment of principal and interest of indebtedness of the company in respect of the corporate bonds previously issued or other liabilities incurred by the company, if any;
18. If the corporate bonds to be issued are convertible into shares, the method of such conversion;
19. If share subscription warrants is associated with the corporate bonds to be issued, the method for exercising such option;
20. The minutes of the meeting of the board of directors involved;
21. Other matters pertaining to the issuance of the corporate bonds, or other requirements stipulated by the authority in charge of securities affairs.
Issue of corporate bonds to specific creditors shall be free from the restrictions set out in Item 2, Article 249 and Item 2, Article 250 hereof provided, however, that the company shall, within 15 days after the issuance thereof, submit to the authority in charge of securities affairs for its records a report on the issuance thereof accompanied with relevant supporting information. Companies eligible for issuing corporate bonds to specific creditors shall not be limited to the companies listed on centralized trading floor or over the counter trading places, and the companies whose shares are issued to the public.
The number of creditors to whom the corporate bonds are to be issued shall not exceed 35 persons, but this limitation shall not apply, if the subscribers are of financial institutions.
In the event of any change in any of the particulars declared under the preceding Paragraph, the company shall file to the authority in charge of securities affairs an application for correction. The responsible person(s) who fail(s) to apply for such correction shall be subject to a fine of not less than NT$ 10,000 but not more than NT$ 50,000 to be imposed by the authority in charge of securities affairs.
The information as required in Item 7; Items 9 through 11; and Item 17 of Paragraph I under this Article shall be audited and certified by a certified public accountant; while the information as required in Items 12 through 16 shall be verified and certified by a practicing lawyer.
The trustees as required in Item 12, Paragraph I under this Article shall be limited to banking and trust enterprises, and shall be appointed at the time when applying for issue of corporate bonds and shall be paid by the company for their services.
In the event the aggregate number and value of the corporate bonds convertible into shares as set forth in Item 18 or of the aggregate number and value of the shares subscribable under Item 19 of Paragraph I of this Article plus the total number of outstanding shares, the total number of shares convertible from the corporate bonds previously issued, the total number of shares subscribable by holders of the share subscription warrants associated to the special shares previously issued, and the total number of shares subscribable by holders of share subscription warrants previously issued exceeds the total number of shares specified in the articles of incorporation, the issue of convertible corporate bonds may be effected only after a change or alteration of the Articles of Incorporation for increasing the amount of capital stock has been made.
Article 249
Under any of the following circumstances, a company shall not issue unsecured corporate bonds;
1. Where the company has done any act in breach of contract, or has been in default of payment of principal and interest, in respect of previously issued corporate bonds or other debts, although the debt is now settled; or
2. Where the company’s average annual net profit, after paying tax, of the most recent three years or, in case the company has been in operation for less than three years, of the years the company is in operation, does not reach one hundred fifty per cent of the total amount of interest payable on corporate bonds intended to be issued.
Article 250
Under any of the following circumstances, a company shall not issue corporate bonds:
1. Where the company has done any act in breach of contract, or has been in default of payment of principal and interest, in respect of previously issued corporate bonds or other debts, and such state of thing still exist; or
2. Where the company’s average annual net profit, after paying tax, most recent three years or, in case the company has been in operation for less than three years, of the years the company is in operation, does not reach one hundred per cent of the total amount of interest payable on corporate bonds intended to be issued, provided, however, that corporate bonds that are issued under bank guarantee shall not be restrained.
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