2013-01-21
Taiwan Company Act Adopts Concept Similar to Piercing the Corporate Veil
Under Article 154 of Taiwan’s Company Act, a shareholder’s liability to the company is limited to the value of the share owned by the shareholder. On January 14, 2013, Taiwan’s Legislative Yuan passed a major amendment to the Company Act which adopts the concept similar to “piercing the corporate veil” and extends the liability of shareholders.
According to the newly amended Paragraph 2 of Article 154 of the Company Act, where a shareholder abuses the company’s status as a juristic person, thereby causes the company to bear specific debts, and where clearance of said debts poses an obvious difficulty for the company, the shareholder will be liable for the obligation when such situation is material and to the extent necessary.
The Legislators emphasized that this amendment aims primarily at preventing shareholders who, while hiding behind the company, drain funds from the company thus resulting in losses suffered by other shareholders or debtors of the company. The amendment makes such shareholders personally responsible for such losses, regardless of the independent statuses of the company and the shareholder.
The amendment must still be officially announced by the President before it will become effective.
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