The Supreme Court rendered the 103-Tai-Shang-1570 Civil Decision of August 7, 2014 (hereinafter, the "Decision"), holding that when a joint shareholder of a company limited by shares exercises the right of a shareholder by attending a shareholders' meeting, this is not an act of managing jointly owned objects and is instead an act to exercise other rights of jointly owned property. Therefore, the provisions of Article 828, Paragraph 3 of the Civil Code shall apply, and such act may be engaged only with the consent of all joint owners.
According to the facts underlying the Decision, the original shareholder holding 1.45 million shares of the total outstanding 6 million shares of Yen Zhou Co., Ltd. was deceased and his shares became jointly owned by three inheritors. Individual A, who is the supervisor of Yen Zhou Co., Ltd., claimed that the company's shareholders refused to hand over business and financial books and records for inspection so to seize control of the company. Further, a special shareholders' meeting (hereinafter, the "Shareholders' Meeting at Issue") was subsequently organized to remove Individual A from the position of supervisor. However, one of the three joint owners of the jointly owned 1.45 million shares issued a letter to specifically indicate his disagreement to the exercise of the rights associated with the jointly owned shares by the other two joint owners. Therefore, Individual A believed that since the voting powers associated with the shares held by the shareholders attending the Shareholders' Meeting at Issue fell short of the majority of the total outstanding shares, surely no deliberation and resolution of any proposal may be conducted. As previously indicated, Individual A further asserted that the agenda items, all of the extemporaneous motions and the resolution to re-elect all of the directors and supervisors in the Shareholders' Meeting at Issue were not valid and confirmed that the supervisor appointment relationship between Yen Zhou Co., Ltd and Individual A existed.
The issue of this Decision is whether the consent of all joint owners is required before the joint shareholder of a company limited by shares may exercise rights when attending a shareholders' meeting. Article 831 of the Civil Code, to which Article 828, Paragraph 2 (to which Article 820, Paragraph 1 applies mutatis mutandis) applies mutatis mutandis, provides: "Except as otherwise stipulated by contract, a jointly owned object shall be managed by the majority of the joint owners owning the majority of the object, provided that the number of owners shall not be counted if the combined ownership exceeds two thirds." According to the Decision, the management of jointly owned property under such paragraph refers to the preservation, improvement and benefit extraction of jointly owned property.However, the exercise of shareholders' rights by joint shareholders of a company limited by shares by attending a shareholders' meeting is not an act of management mentioned above and is instead an act of exercising other rights over the jointly owned property. Therefore, Article 828, Paragraph 3 of the Civil Code shall apply mutatis mutandis and such act requires the consent of all joint owners. In this disputed matter, the 1.45 million shares of Yen Zhou Co., Ltd. are jointly owned by three individuals. However, since one of them did not agree to the other two's exercise of rights, the Supreme Court held that 1.45 million shares should not be included in the attending shares of the Shareholders' Meeting at Issue and reversed and remanded the original trial court decision to the Taiwan High Court.