April 2023
Julian Lai
In the event of a struggle for the power of control of a limited company, the shareholders’ right to inspect books and records under Articles 48 and 109 of the Company Act is oftentimes the focus of the dispute between the two parties. Article 48 of the Company Act provides: “Shareholders (of an unlimited company) who do not conduct business may, at any time, require shareholders who conduct business to furnish information on the business condition of the company and examine its property documents, books, and statement.” Similarly. Article 109, Paragraph 1 of the Company Act provides: “Shareholders (of a limited company) who do not conduct business may, from time to time, exercise the right of audit, and the provisions in Article 48 shall apply mutatis mutandis to such rightof audit.” This shows that the provisions governing the exercise of the audit right by a non-executive shareholder of an unlimited company are applicable mutatis mutandis to the exercise of the audit right by a non-executive shareholder of a limited company, and such a shareholder may review the property documents, books, and statements of the company. Nonetheless, there is ongoing debate as to whether a non-executive shareholder of a limited company may additionally request the delivery and duplication of property documents or books and records, in conjunction with the inspection of relevant property documents or books and records. For this issue, the 111-Tai-Shang-2602 Decision of the Supreme Court, which is different from the opinion in the original decision, is worthy of reference and comparison.
1. Opinion of the High Court
The High Court opined that Article 48 of the Company Act has a literal meaning that a non-executive shareholder may only request to “inspect” property documents, books, and statements related to the company’s operation, but does not specifically stipulates whether a non-executive shareholder may request the company to “deliver” or “duplicate” the documents. Therefore, the interpretation should not deviate from the literary scope of the above legal provision, and a non-executive shareholder of a limited company may not request the delivery or duplication of the company’s property documents or books and records.
2. Opinion of the Supreme Court
The Supreme Court held that the legislative intent of Article 109, Paragraph 1 and Article 48 of the Company Act is that since non-executive shareholders are not involved in the operation of the company, they may inspect the company’s property documents, books, and statements in order to understand the operating status of the company, protect their shareholders’ rights and interests, and prevent arbitrary manipulation of the company by the directors. Therefore, the inspection provided for in Article 109, Paragraph 1 and Article 48 of the Company Act shall be interpreted in an expanded manner, which means that in addition to inspection and review, any means that can serve the regulatory purposes of allowing non-executive shareholders to understand and monitor the operation of the company, such as requesting the delivery of property documents, books, and statements and the duplication of such documents, shall be included. Therefore, a non-executive shareholder of a limited company shall be able to request the delivery and duplication of the company’s property documents or books and records in order to understand the operating status of the company.
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