The resignation of the chairman of the board pertains to the vacancy of the chairmanship, which is different from the case of the chairman’s “inability to exercise his power and authority for any cause” as provided in Article 208, Paragraph 3 of the Company Act. The chairman’s authority will lapse as the chairman resigns, and so will the agency authority of an agent conferred upon by the chairman. (Taiwan)

2018.3.15
Fang-Wei Lin

The Supreme Court Judgment rendered at Mar 22, 2018 (Ref. No. 107-Tai-Shang-97 Civil Decision) holds that the resignation of the chairman of the board pertains to the vacancy of the chairmanship, which is different from the case of the chairman’s “inability to exercise his power and authority for any cause” as provided in Article 208, Paragraph 3 of the Company Act; the chairman’s authority will lapse as the chairman resigns, and so will the agency authority of an agent conferred upon by the chairman.

According to the facts underlying this Decision, the Plaintiff filed a complaint alleging that since he had resigned as the chairman and the director of the Defendant company and had thus been unable to serve as the chairman of the shareholders’ meeting (hereinafter as “the first shareholders’ meeting”), he had designated Directors A and B of the company to jointly conduct the meeting.  However, the attendees of the shareholders’ meeting did not meet the quorum and thus no lawful resolution could be adopted.  Without a board resolution, Director A called the shareholders’ meeting once again (hereinafter as “the shareholders’ meeting at issue”) in the name of directors.  The Plaintiff argued that the meeting was convened without authorization and requested the court to nullify the resolution which had been adopted in the shareholders’ meeting at issue.  The lower court ruled against the Plaintiff.  Dissatisfied, the Plaintiff appealed.

According to the Decision, the resignation of the chairman of the board pertains to the vacancy of the chairmanship, which is different from the case of the chairman’s “inability to exercise his power and authority for any cause” as provided in Article 208, Paragraph 3 of the Company Act.  Since the authority of the chairman lapses after his resignation, the agency authority of an agent designated by the chairman based on his position also lapses, and the by-election of the chairman shall be conducted in accordance with Article 208, Paragraphs 1 and 2 of the Company Act.  Before the by-election of the chairman can be conducted, Paragraph 3 of the same article can apply by analogy where the vice chairman may act for the chairman.  In the absence of a vice chairman, managing directors or directors may elect one person among themselves to temporarily act for the chairman to facilitate the organization of a meeting for re-electing the chairman and the execution of the company’s business.

The Court further points out that in the current case where the Plaintiff resigned as the chairman and a director, Article 208, Paragraph 3 of the Company Act shall apply by analogy so the remaining two directors shall elect one person between themselves to act as the temporary chairman before the by-election of the chairman is conducted.  Therefore, it is necessary to investigate and ascertain whether Director A’s authority to preside over the first shareholders’ meeting and to call the shareholders’ meeting at issue is by the retainment (designation) of the Plaintiff or by mutual election between the directors for acting as the temporary chairman. The difference is relevant in deciding whether the shareholders’ meeting at issue was convened by an authorized person.  Thus, the original decision was reversed and remanded.