According to Article 192-1 of the Company Act, any shareholder holding 1% or more of the total number of outstanding shares issued by the company may submit to the company in writing a list of director candidates.  In previous cases of contests for corporate control, it was common for the encumbering party to reject the candidates on the grounds that the nomination documents provided by the shareholders were incomplete.  Given such, the Company Act was amended in 2018, stipulating that the shareholders are only required to provide the name, qualifications, and experience of the candidates without producing documentations and the board may only conduct pro forma review on the candidates nominated by the shareholders. 

Notwithstanding the above, after the Company Act's amendment in 2018, it still happens in some cases that the director candidates are struck off by the company.  In the CGS case, the company still struck off the candidates nominated by the shareholders on the grounds that the nomination form did not state the shareholder account number or name, was not stamped with the company's chop, was filled out with incorrect uniform number, and the address stated therein is inconsistent with the registered address.  The commercial court held that the above matters were all administrative matters.  Since the company has already accepted the application, the company would not be affected even if the application was not stamped with the company's chop or the shareholder account number or name was not stated therein.  Furthermore, after accepting the application, the corporate governance officer has examined the application and checked the box in the checklist that the candidates should be included.  It could be seen that the company has made verifications and shall not struck off the candidates nominated by the shareholders.  The commercial court therefore granted the provisional injunction maintaining a temporary status quo filed by the shareholders and ordered the company to include the candidates nominated by the shareholders.^[1]

In the DAS case, the company struck off the three independent director candidates nominated by the shareholders on the ground that two of them did not provide a certificate of passing the national examination and the other one did not provide any working experience.  The commercial court held that although the shareholders did not provided the certificate of passing the national examination of two of the candidate, the shareholders have presented the bar certificates and the certificates of incumbency.  The date of admission to the bar as stated in the bar's membership directory was sufficient to show that the candidates have been in their professional practice for more than five years.  The other candidate has been a director of another company since 2012 and the chairman of the same company since 2015, which showed that such candidate had experience in operation and management.  The commercial court therefore granted the provisional injunction maintaining a temporary status quo filed by the shareholders and ordered the company to include the candidates nominated by the shareholders.^[2]

From the above two court rulings, it appears that the court currently only allows the company to conduct a low level of pro forma review on director candidates.  If the company has verified and examined the identity of the nominating shareholders after acceptance, the company shall not be allowed to struck off the candidates on the basis of defect in the nomination document.  In addition, although Taiwan law has higher qualification requirements for independent directors, it is not necessary for the company to obtain specific documents in order to verify whether such qualifications are met.  If it could be inferred from the documents produced by the shareholders that the candidates are eligible, the company shall not struck off the candidates on the ground of lack of specific documents.  Given the above, it is advisable for the company to act prudently in accepting the nomination of director candidates from shareholders, so as to minimize the legal risk of any following litigations. 

(The article is originally in Chinese which can be found here.)