November 2017
If a chairman convenes a shareholders' meeting by himself, this merely pertains to whether the shareholder resolution may be revoked because the procedure for convening the shareholders' meeting is unlawful(Taiwan)
2017.8.23
Grace Chiang
The Supreme Court issued the 106-Tai-Shang-1649 Civil Decision of August 23, 2017 (hereinafter, the "Decision"), holding that If a chairman convenes a shareholders' meeting by himself, this merely pertains to whether the shareholder resolution may be revoked because the procedure for convening the shareholders' meeting is unlawful. The shareholder resolution shall not be directly concluded as invalid.
According to the facts underlying this Decision, the Plaintiff was a shareholder and director of the Defendant, while Director A, another director, was the chairman of the Defendant. Before the term of their directorship expired, A had called the shareholders' meeting at issue by himself, without any board resolutions, to re-elect A and another two individuals as new directors and then call the board meeting at issue in the afternoon of the same day to appoint himself as the new chairman. The Plaintiff asserted that since A had no right to call a shareholders' meeting, a declaratory judgment was sought to confirm that both the resolutions of the shareholders' meeting at issue and the board meeting at issue were invalid. After a decision was rendered in favor of the Plaintiff by the original trial court, the Defendant appealed.
According to the Decision, the court deemed that although Article 171 of the Company Law provides that a shareholders' meeting shall be convened by the board of directors except otherwise stipulated under the Company Law. Furthermore, the forepart of Article 203, Paragraph 1 and Article 208, Paragraph 3 of the Company Law specifically provide that board meetings shall be convened by the chairman and that the chairman shall be the chair of board meetings. Therefore, to convene a shareholders' meeting, the chairman should first call a board meeting to make a resolution to call a shareholders' meeting. However, if a company's chairman convenes a shareholders' meeting without following the above procedure, this merely pertains to the issue of whether the shareholder resolution may be revoked by a petition filed to the court on the ground that the procedure for convening the shareholders' meeting is unlawful, which is different from the situation that a shareholder resolution is invalid for convened by an unauthorized organizer.
It was further held in this Decision that since the original decision had held an opposite opinion concerning the above legal issues and had rendered a decision against the Defendant that all resolutions were invalid in violation of laws and regulations because being made by the shareholders' meeting convened by A without any board resolutions which constituted as not convened by authorized person. Accordingly, the original decision was reversed and remanded.
Grace Chiang
The Supreme Court issued the 106-Tai-Shang-1649 Civil Decision of August 23, 2017 (hereinafter, the "Decision"), holding that If a chairman convenes a shareholders' meeting by himself, this merely pertains to whether the shareholder resolution may be revoked because the procedure for convening the shareholders' meeting is unlawful. The shareholder resolution shall not be directly concluded as invalid.
According to the facts underlying this Decision, the Plaintiff was a shareholder and director of the Defendant, while Director A, another director, was the chairman of the Defendant. Before the term of their directorship expired, A had called the shareholders' meeting at issue by himself, without any board resolutions, to re-elect A and another two individuals as new directors and then call the board meeting at issue in the afternoon of the same day to appoint himself as the new chairman. The Plaintiff asserted that since A had no right to call a shareholders' meeting, a declaratory judgment was sought to confirm that both the resolutions of the shareholders' meeting at issue and the board meeting at issue were invalid. After a decision was rendered in favor of the Plaintiff by the original trial court, the Defendant appealed.
According to the Decision, the court deemed that although Article 171 of the Company Law provides that a shareholders' meeting shall be convened by the board of directors except otherwise stipulated under the Company Law. Furthermore, the forepart of Article 203, Paragraph 1 and Article 208, Paragraph 3 of the Company Law specifically provide that board meetings shall be convened by the chairman and that the chairman shall be the chair of board meetings. Therefore, to convene a shareholders' meeting, the chairman should first call a board meeting to make a resolution to call a shareholders' meeting. However, if a company's chairman convenes a shareholders' meeting without following the above procedure, this merely pertains to the issue of whether the shareholder resolution may be revoked by a petition filed to the court on the ground that the procedure for convening the shareholders' meeting is unlawful, which is different from the situation that a shareholder resolution is invalid for convened by an unauthorized organizer.
It was further held in this Decision that since the original decision had held an opposite opinion concerning the above legal issues and had rendered a decision against the Defendant that all resolutions were invalid in violation of laws and regulations because being made by the shareholders' meeting convened by A without any board resolutions which constituted as not convened by authorized person. Accordingly, the original decision was reversed and remanded.
