Defect of Improper Prohibition Against Shareholders’ Attendance in Shareholders’ Meetings by Companies (Taiwan)

January 2023

Aaron Chen and Julian Lai

Article 189 of the Company Act provides: “In case the procedure for convening a shareholders’ meeting or the method of adopting resolutions thereat is in contrary to any law or regulation or the company’s Articles of Incorporation, a shareholder may, within 30 days from the date of adoption of the resolution, file a complaint with a court to revoke the resolution.”  However, Article 189-1 of the Company Act provides: “Upon receipt of the complaint for the revocation of a resolution filed under the preceding article, if the court considers that the fact of violation described in the complaint is immaterial and will not affect the resolution, the court may dismiss such a complaint.” Their legislative objectives seek to avoid any abuse of a suit to revoke a resolution adopted by a shareholders’ meeting.  Therefore, the court is endowed with discretionary power to ex officio dismiss the lawsuit to take into account the rights and interests of most of the shareholders. The question is how can the provision that “the fact of violation is immaterial and does not affect the resolution” be interpreted and applied?

The Supreme Court pointed out in the 110-Tai-Shang-3067 Civil Decision: “If a company improperly prohibits a shareholder from attending a shareholders’ meeting and actively violates the shareholder’s right to participate in the shareholders’ meeting, it shall be deemed that the fact of violation is material, and the court shall not deny the request to revoke the resolution of the shareholders’ meeting, regardless of whether the act has any effect on the resolution.”

The Supreme Court held that when Chao-chan Liu and another individual designatedby the plaintiff in this case attended the shareholders’ meeting, they brought a meeting notice, the appointment letter, and the plaintiff company’s amendment registration form, which is sufficient to confirm that they attended the shareholders’ meeting on behalf of the plaintiff.  The defendant’s refusal to complete the plaintiff’s check-in procedure on the ground that the meeting notice and appointment letter were not affixed with the plaintiff’s original authorized seal deprived the plaintiff of the basic right to attend the shareholders’ meeting as a shareholder.  Therefore, the procedure for calling the shareholders’ meeting violates laws and regulations.  In addition, the above circumstance where laws and regulations were violated pertains to the improper prohibition against the plaintiff’s attendance in the shareholders’ meeting at issue and affirmatively violates the plaintiff’s rights and interests to attend the shareholders’ meeting.  Since the fact of violation is material, Article 189-1 of the Company Act does not apply.

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