August 2017
The cumulative loss stipulated in the proviso of Article 235-1 of the Company Law shall include the amount of the cumulative loss adjusted due to the accounting process during the year(Taiwan)
Angela Wu
The Ministry of Economic Affairs issued the Jing-Shang-10502409260 Directive of April 15, 2016 (hereinafter, the "Directive"), pointing out that the cumulative loss stipulated in the proviso of Article 235-1 of the Company Law shall include the amount of the cumulative loss adjusted due to the accounting process during the year.
Article 235-1, Paragraph 1 of the Company Law provides: "A fixed amount or ratio of profit of the current year distributable as employees' compensation shall be specified in the Articles of Incorporation. However, the company's cumulative loss, if any, shall be offset first."_
This Directive pointed out that the so-called "cumulative loss" in such proviso means the cumulative loss recognized by the shareholders' meeting and does not include the current loss incurred during a business year.
This Directive also cited an example as follows. If a cumulative loss is offset by the profit from 2015, basically the profit should be used to offset the cumulative loss from 2014 as recognized by the shareholders' meeting. Such cumulative loss also includes the amount of cumulative loss adjusted due to the accounting process during 2015. As for the loss not included in 2015, it should be dealt with in 2016 at the latest based on the above principle.
The Ministry of Economic Affairs issued the Jing-Shang-10502409260 Directive of April 15, 2016 (hereinafter, the "Directive"), pointing out that the cumulative loss stipulated in the proviso of Article 235-1 of the Company Law shall include the amount of the cumulative loss adjusted due to the accounting process during the year.
Article 235-1, Paragraph 1 of the Company Law provides: "A fixed amount or ratio of profit of the current year distributable as employees' compensation shall be specified in the Articles of Incorporation. However, the company's cumulative loss, if any, shall be offset first."_
This Directive pointed out that the so-called "cumulative loss" in such proviso means the cumulative loss recognized by the shareholders' meeting and does not include the current loss incurred during a business year.
This Directive also cited an example as follows. If a cumulative loss is offset by the profit from 2015, basically the profit should be used to offset the cumulative loss from 2014 as recognized by the shareholders' meeting. Such cumulative loss also includes the amount of cumulative loss adjusted due to the accounting process during 2015. As for the loss not included in 2015, it should be dealt with in 2016 at the latest based on the above principle.
