|Your Taiwan CPA - An Affordable Taiwan Chartered Accountant & Legal Services Firm|
This guide provides a structured approach to start the various types of business such as, a branch office, a representative office, a private limited liability company or a company limited by share as a subsidiary, a general partnership, a limited partnership, a sole proprietorship for registration in Taiwan.
Step 1: Decide on a Business Structure
Step 2: Chinese Company Name Approval
Step 3: Finding Premises
Step 4: Registration, Incorporation and Permit
Step 5: Taxation
Step 6: A case study: register a private limited liability company
Step 1: Decide on a Business Structure
The body monitoring the requirements of the Company Act is the Ministry of Economic Affairs (MOEA).
In general, foreign investment is fairly unrestricted and funds can be freely remitted in and out of the country.
Follow the steps on the process of registration and incorporation by selecting an appropriate business type.
Check if your country of origin has concluded an investment protection treaty with Taiwan for protection from expropriation and similar interference with their private property by the respective other state.
Depending on the business status and character, a company in Taiwan falls into the following categories:
A representative office (RO) is usually set up when a foreign company wishes to establish a presence in Taiwan, not intending to actually carry on any sales activities. It has no legal status; it is merely an administrative arrangement and primarily designed for non-commercial activities. Legally, a RO is not a business entity per se and not allowed to perform any activities with a view to generating profits.Permitted Activities
If a foreign corporation does not want to incorporate a company in Taiwan, it must first be registered as a branch in order to carry on business under the corporate title of the foreign corporation. Legally a branch of a foreign company is only an extension of its Head Office rather than a subsidiary company, which is owned by the foreign parent company.
The shareholders, structure of company, and its activities are directed by foreign company’s Memorandum and Articles of Association (MAA). There is no separate MAA for its branch office.
A branch is not a separate legal entity in that its debts and liabilities are part and parcel of those of the head office of the foreign corporation, and its activities are limited to those stipulated in the constitution of the head office. A claimant can approach the Taiwan courts of law to initiate legal proceeding against the headquarters, by virtue of its branch being located in the Taiwan.
A branch needs a legal representative and a branch manager to act on behalf of the company and to accept service of process and any notices required to be served on the corporation who are either
An Incorporated Company
In Taiwan, the two main types of incorporated companies are:
A Private Limited Liability Company is the most common type of company in Taiwan; it may be registered with only one shareholder who can be a human or a corporation. There is no requirement for shareholder(s) to be resident in Taiwan.
The liability of the shareholders is limited to the amount, if any, paid on the shares issued to them. However, there is no minimum capital requirement. The company can be formed with an issued capital of TWD 10,000 that can subsequently be increased to the required amount. The par value of shares is not fixed.Representatives
One-man companies with a single (person or corporate) shareholder are admissible, and a company can only have one director. A Company Limited by Shares must elect at least three directors to set up a board of directors and no working permit is required to be a director. Any person, including foreign nationals, at least 20 years old may be appointed as a director.
Every foreign investor who plans to register a company under Taiwan Companies Act must engage one agent acting on behalf of its, his, or hers in Taiwan. The agent must be a Taiwan Certified Public Accountant (CPA) or a Lawyer.
Directors of a Taiwan company bear a host of duties and responsibilities. The Companies Act requires directors to act honestly at all times and exercise reasonable diligence in discharging their duties. Directors’ duties fall under three main categories:
A Company Limited by Shares must appoint at least one person to be the supervisor responsible for supervising the Board of director(s) and company’s administrative activities as prescribed by law. The supervisor shall be a natural person, who could be a foreigner.
An Auditor must be appointed if the registered capital is more than TWD 30,000,000. The company must submit annul financial statement audit reports to the Ministry of Economic Affairs.
A General Partnership
In Taiwan, a General Partnership has two or more partners registered as a partnership entity, which is not a separate legal. Each partnership has unlimited liability due to the willful misconduct or gross negligence of one partner or a group of partners. All of its partners are personally liable for the debts and obligations of the partnership except in situations where those debts and obligations arise as a result of their own negligence or fraudulence. The mutual rights and duties of the Taiwan partnership and its partners are governed by the partnership agreement. A General Partnership is not qualified to hire foreign employees, and its owner is not qualified to have a work permit.
A Limited Partnership
Taiwan Limited Partnership Act has been effective since Nov. 30, 2015. A Limited partnership is a for-profit juridical person organized and registered under Limited Partnership Act. A limited partnership shall consist of at least one general partner and one limited partner who agrees to make capital contribution to the partnership. A juridical person may be a General Partner provided that it shall designate a natural person as its representative to exercise, on its behalf, the duties of a general partner. The General Partner shall be directly or indirectly responsible for actual business operation of a limited partnership and shall be jointly and severally liable when the assets of the limited partnership are not sufficient to meet its liabilities. A Limited Partner is a partner with liability limited to the amount of his or her capital contribution under a limited partnership agreement. The responsible person of a limited partnership must be one of the general partners of the limited partnership. Any managerial officer or liquidator of the limited partnership who acts within the scope of such duties is also a responsible person. A Limited Partnership is not qualified to hire foreign employees, and its owner is not qualified to have a work permit.
A Sole Proprietorship
Sole proprietorship is the simplest and flexible form of business structure in Taiwan. The sole proprietorship meets the statutory requirement to register all profitable activities carried out on a continuous basis. However, as it does not constitute a separate legal entity, it is not distinct from the owner/ proprietor. The business owner is personally accountable for all liabilities incurred during the course of the business.The owner himself/herself will act in the capacity of the manager, who could be a foreigner of at least 20 years of age.
A Sole proprietorship is not qualified to hire foreign employees, and its owner is not qualified to have a work permit.
Tel: 886 2 2325 3256 | Fax: 886 2 2325 2065 | Taipei Address: 10F, No 38, Dunhua South Road, Section 2, Taipei 106, Taiwan
© 2005 Good Earth CPA - Taiwan Chartered Accountant. All rights reserved. Designed by Jack Tseng