Nora Shih
The Taichung High Administrative Court rendered the 108-Su-321 Decision of April 9, 2020 (hereinafter, the “Decision”), holding that if the authority that formally reviews documents attached to a company registration application before granting an approval subsequently finds that the approval is illegal for inconformity with the factual state, it may cancel the incorporation registration and the relevant deposition rendered based on the factual mistake.
According to the facts underlying this Decision, the Ministry of Economic Affairs (hereinafter, the “MOEA”) approved the incorporation registration of Company A. Subsequently the Plaintiff (a shareholder of Company A) and Legal Representative B of Company A were subject to a deferred prosecution disposition by the Taichung District Prosecutors Office of Taiwan for committing the offense under Article 9, Paragraph 1 of the Company Law. Later, Company A attached the above deferred prosecution disposition to its request to the Defendant (Taichung City Government) to cancel or revoke its company registration in accordance with Article 9 of the Company Law. The Defendant requested Company A, Legal Representative B and the Plaintiff to submit relevant documents to complete capital correction procedure and communicated that if this formality was not completed by the deadline, the company incorporation registration would be canceled in accordance with Article 117 of the Administrative Procedure Law. The Plaintiff subsequently held himself out as the legal representative of Company A and attached an amendment registration application and relevant documents to his application to the Defendant to transfer shareholder’s capital contribution, appoint new directors and register the amendments to the articles of incorporation. However, Legal Representative B of Company A separately applied to the Defendant for its ex officio cancellation of the company’s incorporation registration. The Defendant cancelled the MOEA’s disposition that approved the incorporation registration of Company A in accordance with Article 117 of the Administrative Procedure Law on the ground that the required correction was not made by Company A by the deadline, and that the original disposition that approved the amendments to the article of incorporation and the registration of the change of the capital contribution was rendered based on factual mistakes (hereinafter, the “First Original Disposition”). Dissatisfied with the First Original Disposition, the Plaintiff filed an administrative appeal, which was dismissed by a decision on administrative appeal rendered by the MOEA (hereinafter, the “First Decision on Administrative Appeal”). With respect to the amendment registration application of Company A, the Defendant rendered a disposition to “reject the application” (hereinafter, the “Second Original Disposition”) after finding that the application did not comply with the requirements since the above-mentioned First Original Disposition had been rendered to cancel the incorporation and relevant registration of Company A. Also dissatisfied with, the Plaintiff filed an administrative appeal, which was dismissed by a decision on administrative appeal rendered by the MOEA (hereinafter, the “Second Decision on Administrative Appeal”). Both dissatisfied with the First and Second Decisions on Administrative Appeal, the Plaintiff brought an administrative action.
According to the Decision, the Company Law provides that although the competent authority has approved the registration after its formal review of the documents attached to the company registration application, if it subsequently finds that the disposition that approved the registration is illegal for inconsistency with the factual state, it can certainly ex officio cancel the disposition that approved the incorporation registration and cancel the disposition that approved relevant registration as rendered based on such factual mistake in accordance with Article 117 of the Administrative Procedure Law in order to maintain the accuracy of registration.
It was further indicated in this Decision that the administrative disposition was rendered by the MOEA due to the inaccurate materials provided by the Plaintiff and B about important facts such as authorized capital. Later, Company A failed to complete the correction procedure by the deadline and the Defendant had not detected the reason that the incorporation registration of Company A should be cancelled until receiving the deferred prosecution disposition rendered by the Taichung District Prosecutors Office from Company A. Based on the foregoing reasons, the Defendant was not erroneous when rendering the First Original Disposition to cancel the MOEA’s disposition that approved the incorporation registration and the Defendant’s subsequent disposition that approved relevant registration based on such factual mistake. Therefore, the Plaintiff’s claim that the Defendant should cancel the administrative disposition that canceled Company A’s incorporation registration is groundless.