October 2017

If the complete supporting documentation under Article 192-1, Paragraph 4 of the Company Law for a director candidate nominated by shareholders is not attached, the board of directors may exclude such nominee from the list of candidates without sending a correction notice after verifying such circumstance (Taiwan)

2017.6.30
Grace Chiang

The Taiwan High Court rendered the 106-Shang-254 Civil Decision of June 30, 2017 (hereinafter, the "Decision"), holding that if the complete supporting documentation under Article 192-1, Paragraph 4 of the Company Law for a director candidate nominated by shareholders is not attached, the board of directors may exclude such nominee from the list of candidates without sending a correction notice after verifying such circumstance.

The Defendant in this Decision is a publicly offered company which adopts a director nomination system. The Plaintiff was a shareholder of the Defendant's and nominated two candidates for the election of the Defendant's independent directors. After being notified by the Defendant's personnel to supplement documentation, the Plaintiff supplemented the documentation. However, during a board meeting convened to examine the candidates, the Defendant did not grant the Plaintiff with an opportunity to supplement the documentation and resolved that the independent director candidates nominated by the Plaintiff would be excluded from the list of candidates (hereinafter, "Resolution A") on the ground that the Plaintiff had failed to attach supporting documentation under Article 192-1, Paragraph 4 of the Company Law. The Defendant's shareholders' meeting subsequently adopted a resolution to "re-elect all directors (including two independent directors)" (hereinafter, "Resolution B") according to Resolution A. Therefore, the Plaintiff sought a declaratory judgment to vitiate both Resolution A and Resolution B.

According to the Decision, the Plaintiff was a shareholder holding over 1% of the total outstanding shares and could propose a written list of independent director candidates to the Defendant during the period in which the Defendant accepted nomination of director candidates and submit the names, academic backgrounds and experiences of the nominees as well as a letter of commitment indicating the willingness to serve as directors if they are elected, a statement indicating the candidates are free from any circumstance under Article 30 of the Company Law and other relevant supporting documents.

However, the Company Law, the Securities Exchange Law and relevant laws and regulations do not require prior notification to request correction by the nominating shareholders in the event of deficiency in the required documentation or supporting documents for a shareholder's nomination of independent directors. In addition, an observation of the matters relating to the nomination of director candidates announced by the Defendant does not indicate that the Defendant was obligated to notify the Plaintiff to supplement deficient supporting documents. Moreover, even if the Defendant's personnel had notified the Plaintiff to supplement supporting documents, the Plaintiff did not become obligated to notify the Plaintiff to supplement relevant supporting documents for the nominees, either. Therefore, if the Plaintiff failed to supplement the supporting documents under Article 192-1, Paragraph 4 of the Company Law, which was verified by the Defendant's board of directors, there was certainly no procedure for awaiting a correction notice. To wit, the nominees could be excluded from the list of director candidates. Therefore, Defendant's Resolution A and Resolution B were both legal, and the Plaintiff's complaint to set aside the two resolutions was certainly groundless. Accordingly, the original decision was reversed and a decision was rendered to dismiss the Plaintiff's complaint.

本網站上所有資料內容(「內容」)均屬理慈國際科技法律事務所所有。本所保留所有權利,除非獲得本所事前許可外,均不得以任何形式或以任何方式重製、下載、散布、發行或移轉本網站上之內容。

所有內容僅供作參考且非為特定議題或具體個案之法律或專業建議。所有內容未必為最新法律及法規之發展,本所及其編輯群不保證內容之正確性,並明示聲明不須對任何人就信賴使用本網站上全部或部分之內容,而據此所為或經許可而為或略而未為之結果負擔任何及全部之責任。撰稿作者之觀點不代表本所之立場。如有任何建議或疑義,請與本所聯繫。

作者

Katty
Katty