December 2019
If a company elects to decide the salaries and compensation of the directors, supervisors and managerial officers without individual assessment by the compensation committee in violation of Article 14-6 of the Securities and Exchange Law, this merely gives rise to the issue of whether the competent authority may impose any administrative sanction upon such company, and it does not force such decision to be invalid (Taiwan)
Elva Chuang
The Supreme Court rendered the 108-Tai-Shang-538 Decision of May 23, 2019 (hereinafter, the "Decision"), holding that if a company elects to decide the salaries and compensation of the directors, supervisors and managerial officers without individual assessment by the compensation committee in violation of Article 14-6 of the Securities and Exchange Law, this merely gives rise to the issue of whether the competent authority may impose any administrative sanction upon such company, and it does not force such decision to be invalid.
According to the facts underlying this Decision, Appellant A started to work as an engineer of Appellant Company B on July 1, 1990 and was subsequently promoted to director, manager and then plant manager. Company B transferred A, without his consent, to be the Associate Vice President of Projects in the Project Department of the Mainland China Business Division of the company's head office in Taipei on May 1, 2013 with reduced monthly supervisory position allowances and bonuses. Appellant A applied for retirement on May 27, 2013 and requested Company B to pay the pension, reduced supervisory position allowances, salary for untaken leave and bonuses in accordance with Company B's Employee Retirement Rules (hereinafter, the "Retirement Rules at Issues"), Article 22, Paragraph 2 of the Labor Standards Law and Article 24, Subparagraph 3 of the Enforcement Rules of the Labor Standards Law.
Appellant Company B contended that the Labor standards Law does not apply since Appellant A is the manager under the Securities and Exchange Law and the parties were under a relationship of mandate, not employment. In addition, Company B asserted that since Appellant A's leave taking was absenteeism, the board of directors adopted a resolution to remove Appellant A as a manager on October 24, 2013. Moreover, Company B assert that Appellant A's severance benefit was invalid on the ground that it had not been reviewed by the compensation committee.
According to this Decision, Article 14-6 of the Securities and Exchange Law is a ban provision, not a validity provision. Therefore, Article 71 of the Civil Code does not apply. Such provision only stipulates if the competent authority may impose an administrative sanction against the company, and it does not mean that such decision is always invalid. Therefore, Company B shall not assert that Appellant A's severance benefit was invalid on the ground that it had not been reviewed by the compensation committee.
The Supreme Court rendered the 108-Tai-Shang-538 Decision of May 23, 2019 (hereinafter, the "Decision"), holding that if a company elects to decide the salaries and compensation of the directors, supervisors and managerial officers without individual assessment by the compensation committee in violation of Article 14-6 of the Securities and Exchange Law, this merely gives rise to the issue of whether the competent authority may impose any administrative sanction upon such company, and it does not force such decision to be invalid.
According to the facts underlying this Decision, Appellant A started to work as an engineer of Appellant Company B on July 1, 1990 and was subsequently promoted to director, manager and then plant manager. Company B transferred A, without his consent, to be the Associate Vice President of Projects in the Project Department of the Mainland China Business Division of the company's head office in Taipei on May 1, 2013 with reduced monthly supervisory position allowances and bonuses. Appellant A applied for retirement on May 27, 2013 and requested Company B to pay the pension, reduced supervisory position allowances, salary for untaken leave and bonuses in accordance with Company B's Employee Retirement Rules (hereinafter, the "Retirement Rules at Issues"), Article 22, Paragraph 2 of the Labor Standards Law and Article 24, Subparagraph 3 of the Enforcement Rules of the Labor Standards Law.
Appellant Company B contended that the Labor standards Law does not apply since Appellant A is the manager under the Securities and Exchange Law and the parties were under a relationship of mandate, not employment. In addition, Company B asserted that since Appellant A's leave taking was absenteeism, the board of directors adopted a resolution to remove Appellant A as a manager on October 24, 2013. Moreover, Company B assert that Appellant A's severance benefit was invalid on the ground that it had not been reviewed by the compensation committee.
According to this Decision, Article 14-6 of the Securities and Exchange Law is a ban provision, not a validity provision. Therefore, Article 71 of the Civil Code does not apply. Such provision only stipulates if the competent authority may impose an administrative sanction against the company, and it does not mean that such decision is always invalid. Therefore, Company B shall not assert that Appellant A's severance benefit was invalid on the ground that it had not been reviewed by the compensation committee.
