The Supreme Court rendered the 106-Tai-Shang-177 Civil Decision of July 6, 2017 (hereinafter, the “Decision”), holding that the reasons for filing a complaint to remove directors or supervisors by a securities and futures market protection institution in accordance with Article 10-1, Paragraph 1, Subparagraph 2 of the Law for Investment Protection by Protection Institutions (hereinafter, the “Law”) for any act that impairs the company or violates any law or regulation or the articles of incorporation shall not be limited to the current tenure of such directors or supervisors.
According to the facts underlying this Decision, Appellant Securities and Futures Investment Protection Center (hereinafter, the “Center”) asserted that Appellee A caused major damage to Tatung Co., Ltd. (hereinafter, “Tatung Co.”) when he served as a director or the chairman of Tatung Co. during 2005 through 2010 for his acts which violated its articles of incorporation and laws and regulations. Therefore, a complaint was filed to remove A from his directorship during 2014 through 2017 in accordance with Article 10-1, Paragraph 1, Subparagraph 2 of the Law. It was held in the original decision that since all of A’s major acts of business execution which materially damaged the company or violated laws and regulations or its articles of incorporation had taken place during A’s former term of directorship, the Center’s complaint to remove A’s current position as a director was legally inappropriate. Therefore, the original decision was rendered against the Center. Dissatisfied, the Center filed this appeal.
According to this Decision, Article 10-1, Paragraph 1, Subparagraph 2 of the Law safeguards shareholders’ rights and protects public interest in nature and stipulates that the Center’s exercise of the right to sue shall not be constrained by Article 200 of the Company Law. In addition, since such right may be exercised “upon discovery” of any business execution act engaged by director or supervisor of a listed or OTC-traded company which materially damages the company or violates laws, regulations or the articles of incorporation, the requirements under the above provision concerning dismissal adjudication will be satisfied if any act engaged by a supervisor or director that damages the company or violates laws or regulations or the articles of association is objectively sufficient to lead to the belief that continued office of such director or supervisor is inappropriate since it will cause major damage to shareholders’ equity or social or public interest.
It was further pointed out that such provision stipulates the right of the Center to sue when it discovers such an act. However, the timing of such discovery may be different from the timing of the act. Therefore, the grounds for discharge shall not be limited to the tenure at the time of complaint; otherwise, in case such act takes place when the tenure is going to expire or such act is not discovered by the Center until the tenure expires or the re-election of the director or supervisor who resigned from directorship or supervisorship when such act was found is conducted, if the Center cannot file a complaint with the court to seek the removal of such director or supervisor in accordance with Article 10-1, Paragraph 1, Subparagraph 2 of the Law, shareholders’ equity or social or public interest will not be protected pursuant to such provision, rendering such provision useless. This is not the legislative purpose of this provision.
Therefore, it was further held in the Decision that since the original trial court had failed to substantively examine the reasons asserted by the Center, i.e., whether it was sufficient to conclude that A was not suitable to be a director of Tatung Co. pursuant to the Law after its effective date, and had inappropriately elected to render the original decision against the Center merely on the ground that such reasons asserted by the Center took place before the tenure when the Center filed the complaint to seek A’s removal from office, the original decision was reversed and remanded.