The Supreme Court rendered the 104-Tai-Shang-35 Civil Decision of January 8, 2015 (hereinafter, the "Decision"), expounding that when the authorized representative of a juristic person shareholder is concurrently selected as a director and supervisor, the appointment of the supervisor may be determined to be void via analogous application of Article 26-3 of the Securities and Exchange Law.
According to facts underlying the Decision, Appellee Development Industrial Co., Ltd. organized the shareholders' meeting at issue to re-elect directors and supervisors, for which the two Appellants were also candidates. As a result of the election, the representative of KIMCO Co. was elected as a director, while the representatives of Kuang Hsing Co., not a party to this matter, were elected as a director and a supervisor. However, since Kuang Hsing Co., which is a fully invested by KIMCO Co., has a control or subordination relationship with KIMCO Co., the Appellants believed that the representative should not be concurrently elected as both directors and supervisors. Therefore, they filed a complaint to seek a declaratory judgment ruling that the director appointment relationship between Development Co. and KIMCO and the supervisor appointment relationship between Development Co. and the representative of Kuang Hsing Co. did not exist. After the original decision was rendered against the Appellants, they filed this appeal.
Article 27, Paragraph 2 of the Company Law provides: "Where a government agency or a juristic person acts as a shareholder of a company, its authorized representative may also be elected as a director or supervisor of the company. If there is a plural number of such authorized representatives, each of them may be so elected, but such authorized representatives may not concurrently be selected or serve as the director or supervisor of the company."
According to this Decision, the authorized representatives of juristic person shareholders are prohibited from being concurrently selected or serving as a director and supervisor regardless of whether the company is publicly traded or whether it is large or small. As for the circumstances where the authorized representatives of a juristic person shareholder and the authorized representatives of another juristic person shareholder who is fully invested by the former juristic person shareholder are concurrently selected or serve as directors and supervisors, although the two juristic persons independently exist, still the latter is completely controlled by the former. Therefore, the authorized representatives are substantively assigned by the investing juristic person and the circumstances where the authorized representatives of such two juristic person shareholders are concurrently selected or serve as directors and supervisors are the same as those where several authorized directors of the same juristic person are concurrently selected or serve as directors and supervisors in that both are prohibited under Article 27, Paragraph 2 of the Company Law. Although the Company Law is silent about the validity of such concurrent appointment, still the legislative objectives and the issues concerning how the elected seats should be determined are generally the same as Article 26-3 of the Securities and Exchange Law, which can certainly be applied by analogy. Thus, if such provision is violated, the appointment of a supervisor can be found to be void. Therefore, the original decision was found to be erroneous in its opinions and was reversed and remanded.