The Supreme Court rendered the 107-Tai-Shang-1620 Civil Decision on October 5, 2018 (hereinafter, the “Decision”), holding that supervisors shall not serve concurrently as directors, managerial officers or employees of the company, and in case of any violation, their subsequent actions shall be invalid; and, therefore, one who has acted and who has been elected and appointed as a supervisor but subsequently serve as a managerial officer shall certainly be discharged from his/her subsequent role of the managerial officer.
According to the facts underlying this Decision, the Appellee filed a complaint alleging that Individual A, who is not a party to this lawsuit, had been elected a supervisor of the Appellant in June 2009 for a term of three years. In July 2012, Individual A was elected a supervisor of the Appellant again. However, Individual A had served concurrently as a managerial officer of the Appellant since July 7, 2009. Hence, his election as a supervisor again in July 2012 violated Article 222 of the Company Act and should have been void under Article 71 of the Civil Code. Therefore, Individual A should not have been a supervisor. However, Individual A called a special shareholders’ meeting without authorization in the capacity of a supervisor in March 2015 to re-elect directors and supervisors. Since the procedure for organizing the special shareholders’ meeting violated laws and regulations, a preliminary claim was asserted to seek the declaration that the resolutions adopted during the special shareholders’ meeting were invalid with an additional claim to set aside the resolutions adopted during such special shareholders’ meeting.
The original trial court held that since Individual A had been elected a supervisor of the Appellant and subsequently served as a managerial officer of the Appellant, his concurrent service as a managerial officer violated Article 222 of the Company Act and was certainly invalid. Therefore, he should certainly be removed from office as a managerial officer. In fact, however, Individual A was still acting as a managerial officer of the Appellant and still performed his duty as a managerial officer. Therefore, his election as a supervisor in July 2012 again violated Article 222 of the Company Act and was certainly invalid. Therefore, the resolutions adopted during the special shareholders’ meeting which was organized by Individual A, who had no authority to call the meeting, were certainly invalid. Therefore, the Appellee’s claim to declare that the resolutions adopted during the special shareholders’ meeting were invalid was well-grounded and should be granted. Dissatisfied, the Appellant appealed.
According to this Decision, Article 222 of the Company Act specifically provides that a supervisor shall not concurrently serve as a director, managerial officer or any employee of a company. The legislative objectives are to cause supervisors to perform their duties impartially and to prevent problems or disputes. Therefore, this article contains provisions concerning effectiveness. If they are violated, subsequent acts shall be invalid.
It was further pointed out in this Decision that after Individual A was elected and took office as a supervisor in June 2009, he also served as a managerial officer of the Appellant in July 2009. Since he violated Article 222 of the Company Act, he should certainly be removed from office for the subsequent role of the managerial officer. Therefore, even if he still carried out the duty of a managerial officer continuously, it would seem that it is only how the legal effect of his performance of duties should be further assessed. That is, whether the he still held the status of a managerial officer of the Appellant was certainly questionable. Therefore, it was held in this Decision that the original trial court had failed to conduct detailed investigation and review and elected to render a decision unfavorable to the Appellant simply on the ground that since Individual A still served as a managerial officer of the Appellant and performed the job duty of a managerial officer as a matter of fact, his election as a supervisor in July 2012 was not valid. As above, since the original trial court was rash in arriving at its conclusions, the original decision was reversed and remanded.