Step 1 : Decide on a Business Structure

Mobirise

Business Registration


Step-by-Step Guide


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 (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 selected 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 your status there are various ways to set up a business in Taiwan as:
  • A foreign company who wants to register or incorporate a business in Taiwan or as
  • A foreigner who wants to incorporate a company in Taiwan
Follow the Types of Business Guide below.

 



Representative Office

A representative office is usually set up when a foreign company wishes to establish a presence in Taiwan, but does not intend to actually carry on any sales activity. It has no legal status, but is merely an administrative arrangement and primarily designed for non-commercial activities. Legally, a RO is not a business entity per see and not allowed to perform any activity with the purpose to generate profits.

Permitted Activities
  • conducting market research
  • provide customer support
  • coordinate the activities of its head office’s local agents and distributors
  • conduct feasibility research
  • act as a liaison office during a negotiation deal
  • act as representative for legal litigation

 


A Branch

General Characteristics

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 and not 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 the branch office.

A branch is not a separate legal entity in that its debts and liabilities are part and parcel of the debts and liabilities 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 notice required to be served on the corporation who are either

  • The legal representative and branch manager could be a resident in Taiwan or a foreigner
  • Two position could be held by the same person
  • The branch manager must have a work permit, if she or he is a foreigner.

 



An Incorporated Company

General Characteristics

In Taiwan, the two main types of incorporated companies are:
  • Private Limited Liability Companies: the number of shareholders is at least one and has restrictions on the right to transfer its shares.
  • Companies Limited by Shares: the number of shareholders must be at least two for individual shareholders, or one for the shareholder who is a legal entity. And the Company Limited by Share could be a Public Company.

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 an individual 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 (individual 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, a natural person or a legal entity, who plans to register a company under Taiwan Companies Act, must engage one agent acting on its, his or her behalf in Taiwan. The agent must be a Taiwan Certified Public Accountant 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:

  • Fiduciary Duties: Directors have to act in what they honestly believe to be the company’s interests, and not in the interests of any other party.
  • Duty of Skill, Care and Diligence: A duty of care means, for example, that a director needs to find out what his powers and responsibilities are under the company’s articles and under the law.
  • Statutory Duties: Statutory duties are imposed on directors by statute, principally the Companies Act.
A Company Supervisor

A company Limited by Share must appoint at least one person to be the supervisor whose responsibility is to supervise the Board of director 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 TWD30,000,000; company must make available the annul financial statement audit report to the Ministry of Economic Affairs.

 



A General Partnership

General Characteristics

In Taiwan, a General Partnership has two or more partners that are 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 employee, and its owner is not qualified to have a working permit.

 

 


A Limited Partnership

General Characteristics

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 be composed 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 employee, and its owner is not qualified to have a working permit.

 


A Sole Proprietorship

General Characteristics

Sole proprietorship is the simplest and flexible form of business structure in Taiwan. The sole proprietorship meets the statutory requirement to register all profiteering activities carried out on a continuous basis. However, as it does not constitute a separate legal entity and therefore 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 employee, and its owner is not qualified to have a working permit.




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