The Taichung Branch of the Taiwan High Court rendered the 107-Chung-Shang-Keng-One-12 Civil Decision of October 23, 2018 (hereinafter, the “Decision”), holding that since how to exercise a shareholder’s rights cannot be dictated by a company or its representative, a shareholder’s delivery of shares to another person cannot objectively be deemed connected to the performance of a job duty for the company; and even if the shares are stolen and sold by an individual authorized to represent the company, it is still difficult to cause the company to be held liable for damages.
According to the facts underlying this Decision, the Plaintiff asserted that he had held over 580,000 shares of the Defendant Company and originally attempted to become a director or supervisor. However, Individual A, who was the Chief Executive Officer of the Defendant Company at the time, learned about this and stated that shares held by directors and supervisors shall be handed over to, and monitored by, the company. As a result, the Plaintiff put the shares at issue under Individual A’s custody. It was not until the Plaintiff requested the shares at issue to be returned to him but to no avail when the Plaintiff found that Individual A had stolen and sold the shares at issue by falsifying the Plaintiff’s seal. Therefore, a complaint was filed to request that the Defendant Company and Individual A assume joint and several liabilities in accordance with Article 28 of the Civil Code. The original trial court ruled against the Plaintiff. Dissatisfied, the Plaintiff appealed.
Article 28 of the Civil Code specifically provides that a juristic person shall be jointly and severally liable with the wrongdoer for the injury caused by its directors or other persons who are entitled to represent the juristic person in the performance of their duties.
According to this Decision, using opportunities available to the position and engaging in acts closely related to the timing or location of performance of duties are objectively sufficient to be associated with the performance of duties. If the rights of others are illegally violated, even though the illegal act is engaged by the actor for his/her own benefits and thus should be included, still this calls into question as to how the Plaintiff could exercise his shareholder’s right after he became a shareholder by holding shares of the Defendant Company. In addition, whether the Plaintiff could exercise his voting rights in collaboration with other shareholders was entirely up to the shareholder himself and could not be dictated by the Defendant Company or any director or other people or employees who can represent the company. A company’s position objectively does not include the function to require shareholders to exercise their rights as shareholders in specific manners.
Therefore, it was further concluded in this Decision that even if the Plaintiff handed over the shares at issue to Individual A, it would be objectively difficult to associate it with the performance of duties at the Defendant Company. Therefore, even if the shares at issue were stolen and sold by Individual A, it would still be difficult to impose damages liabilities on the Defendant in accordance with Article 28 and the first part of Paragraph 1 of Article 188 of the Civil Code. Since it was concluded that the original trial court was not unlawful when it rejected the Plaintiff’s complaint, the Plaintiff’s appeal was rejected.