Understanding Company Act Article 22-1

Taiwan recently completed what many consider to be the largest overhaul of its Company Act in nearly 20 years. Important changes have been made in a focused effort to boost corporate governance, and strengthen the country's Anti-Money Laundering (AML) controls.

One of the three 'Asian Tigers', Taiwan boasts a resilient banking sector and an active and diverse stock exchange. To further encourage foreign investment, the government has been easing restrictions on foreign ownership in recent years and looking to enhance corporate governance.

Earlier this year, and following lengthy discussions, the Legislative Yuan passed amendments to the Company Act, which first took effect in July 1931. One agreed amendment was to add Article 22-1, which is also being referred to as an AML clause. This new clause took effect on 1 November 2018.

What is Article 22-1 and why has it been introduced?

Article 22-1 stipulates that board directors, supervisors and managers, as well as shareholders with at least a 10% stake in the company, now need to declare their involvement in the entity. They must also declare any changes in their shareholding within 15 days.

The amendment was introduced to help Taiwan ahead of a detailed evaluation by the Asia/Pacific Group on Money Laundering. Article 22-1 has been perceived as a crucial factor to the group's assessment.

Those who violate these new provisions will be liable to a fine of between NT$50,000 and NT$500,000, if they fail to fulfil their obligations within a period of time stated by the Ministry of Economic Affairs (MOEA). The fine will increase if they continue to ignore these requirements and their company's registration may also be revoked.

What do you need to do and by when?

Locally-incorporated companies operating in Taiwan (with the exception of listed/public companies, branch/representative offices of a foreign company, or companies with investment from government authorities) are now required to do the following.

1. Complete an online registration of directors, supervisors, registered managerial officers and shareholders with at least 10% of outstanding shares or paid-in capital. This must be done by 31 January 2019.

Your online registration must confirm, or edit the following data if what the MOEA portal...