If a public company cannot substantiate that a statement made by a director to indicate that the company has engaged in any legal violation is a deliberate misrepresentation, or that the statement so given is untrue due to gross negligence, it will be difficult to press libel charges against such director (Taiwan)

2018.7.25
Frank Sun

The Taiwan High Court rendered the 106-Shang-Yi-2042 Criminal Decision of July 25, 2018 (hereinafter, the “Decision”), holding that if a public company cannot substantiate that a statement made by a director to indicate that the company has engaged in any legal violation is a deliberate misrepresentation, or that the statement so given is untrue due to gross negligence, it will be difficult to press libel charges against such director.

According to the facts underlying this Decision, the Private Prosecutor asserted that the Defendant had stated during a board meeting that “after looking at the entire annual report distributed in the shareholders’ meeting, I am positive that CLP’s books were definitely cooked,” and had remarked, when he was interviewed by a reporter from Next Magazine, that “Li-chen Chou embezzled NT$300,000 from CLP.”  Since the Defendant had engaged in acts that impaired the reputation of the Private Prosecutor and harmed the Private Prosecutor as a company, private prosecution was brought for the libel offense under Article 310, Paragraph 1 of the Criminal Code.

According to this Decision, the Private Prosecutor is a public company with an authorized capital of NT$4.5 billion.  Since it is a corporate organization with relatively more social resources, it is subject to greater public scrutiny.  Moreover, a company limited by shares generates profits to reward its shareholders through operation, investment and financing, operation and accounting issues of the company limited by shares are indeed critical to shareholders’ equity and its trading counterparts.  In addition, since such issues also pertain to whether a company can operate soundly and are also important public issues with a high public profile, the goodwill of the Private Prosecutor should be compromised to a greater extent vis-a-vis freedom of speech.

It was further pointed out in this Decision that in light of the greater investigation difficulties due to the significant secrecy of a company’s actual transactions and capital change, when the Defendant was informed that relevant legal violations or improprieties had existed inside the Private Prosecutor by relevant witnesses holding important positions in the Private Prosecutor, reviewed relevant written materials and verified with such witnesses, coupled by the fact that the Private Prosecutor’s relevant employees at its Green Energy Department were all interrogated by the Bureau of Investigation and prosecutors, it was sufficient to conclude that the Defendant’s contention that he fulfilled his verification duty and made this statement in good faith in the capacity of the Private Prosecutor’s chairman and director for many years is acceptable.  Therefore, since the Private Prosecutor could not substantiate that the Defendant had willfully falsified facts or made a statement incompatible with reality out of gross negligence, it would be difficult to penalize the Defendant for a libel offense.  Therefore, the Defendant was acquitted.