The principal forms of business organization in Taiwan include companies, branches of foreign, incorporated companies, representative offices, partnerships and sole proprietorships. It is advisable to select the proper vehicle to conduct business in Taiwan at the outset. 

2. Companies

 

There are four types of companies in Taiwan: unlimited company, unlimited company with limited liability shareholders, limited company and company limited by shares. Unlimited company and unlimited company with limited liability shareholders are rarely 
used in practice; a company limited by shares is the most common form of business undertaken for foreign investors in Taiwan. 
A company limited by shares requires at least two shareholders. However, a single shareholder is accepted if the single shareholder is a juristic person or government agency. Have at least three directors and one supervisor who shall be elected by the shareholders?meeting from among the persons with disposing capacity.

 

Shares of a company may be transferred. However, a promoter (initial shareholder) is not permitted to transfer his initial shares subscribed upon incorporation within the first year after the company is incorporated.

 

A limited company must have at least one shareholder and one director. A shareholder may transfer his contribution to the capital 
of the company upon consent of the majority of the other shareholders. A director may also transfer his contribution to the capital 
upon consent of all other shareholders. 

Governing Documents
The Company Act contains basic rules for the management of a company. The legislation that designates the regulatory authority 
for a specific type of foreign investment is the Statute for Investment by Foreign Nationals. 

Directors 
The director of a company shall have the loyalty and shall exercise the due care of a good administrator in conducting the business operation of the company; and if he has acted contrary to this provision, shall be liable for the damages to be sustained by the company there-from. 

Forming a Company
Foreign investors must file an application with the Department of Commerce, MOEA to reserve a Chinese company name and the scope of its business. To set up a company in areas, other than in export processing zones (EPZs) and science parks, a foreign investor should file an application with the Investment Commission, MOEA for prior approval. Once approval is obtained, the foreign investor can remit the capital contribution and file an application with the Investment Commission, MOEA for the examination of funds, and then apply to the company registration authorities for company registration and to the local county/city government for a business license. 

Registration Requirements and Filing Procedures for Public Securities 
A company may, in pursuance of the resolution adopted by its board of directors, apply to the authority in charge of securities for 
an approval of public issuance of its shares. The Executive Yuan’s Financial Supervisory Commission ("FSC") shall supervise the 
handling of public issuance procedures through effective registration. It means submission by the issuer of relevant documents to 
the FSC in accordance with law. Unless the documents are rejected by the FSC due to insufficient information contained in the said documents, or for the purpose of protecting the public interest, the registration will become effective after a designated number of business days from the date when the FSC and FSC-designated institutions receive the submission. 

Audit Requirements and Practices 
The financial statements of public companies and financial institutions must be audited or reviewed by a Taiwanlicensed Certified 
Public Accountant (CPA). For other business entities, the requirement to submit audited financial statements depends on their 
amounts of capital and bank borrowings. 

Shareholdings by Non-residents 
A foreigner, a foreign company or an overseas Chinese is allowed to be a shareholder of any of the above classes of companies 
after obtaining approval, and any such company that receives the approval of the Investment Commission of the Ministry of Economic Affairs (MOEA) is called a Foreign Investment Approved (FIA) company.

 

3. Partnerships and Sole Proprietorships

A partner of a partnership, or a sole proprietor, may only be a natural person. All partners are jointly and severally liable for the obligations of the partnership. There is no minimum capital requirement for partnerships and sole proprietorships.

 

The equity contribution and profit?sharing percentage among partners may be provided for in the partnership agreement. 

4. Foreign Branches

 

A company incorporated outside of Taiwan may establish a branch office to conduct business in Taiwan. A foreign company may 
not transact business in Taiwan without obtaining a certificate of recognition and completing the procedures for branch office registration.

 

A foreign company that shall appropriate funds exclusively for its operation in Taiwan. A foreign company shall designate representative in Taiwan to represent the company in all litigious and non?litigious matters and to serve as its responsible person in Taiwan.

 

 

A representative office is available to foreign companies which do not intend to transact business but intend to conduct limited acts of a legal nature relating to their business. If a foreign company needs its representative to reside in Taiwan most of the time, it can apply to the MOEA to establish a representative office. A representative acts as the companyís legal agent for such matters as obtaining quotations, concluding contracts and procuring goods

 

 

A foreign company should strategically choose to set up a branch or a subsidiary company by comparing the income tax rates of the country of the parent company and Taiwan. If the income tax rate in the parent country is greater than the tax rate in Taiwan, then a subsidiary should be established. On the other hand, if the income tax rate in the parent country is lower than the tax rate in Taiwan, then a branch office should be established instead.

 

It is unchangeable once the representative office, branch or subsidiary company is set up. Therefore, please consider what operation your company is going to generate in Taiwan before you start the process. E.g.: to have a branch in Taiwan at the beginning and subsequently close it and then open a subsidiary.