Abolition of Minimum Capital Requirements for Company Startups
In keeping with the international trend of reducing minimum capital requirements for the establishment of new companies, the Ministry of Economic Affairs (MOEA) is planning to scrap the minimum capital requirements for new company registration, to promote the startup and operation of new enterprises.
A World Bank study has shown that the prescription of certain minimum capital requirements for setting up companies not only restricts people from creating new enterprises and hence impedes entrepreneurship, but also affects a country’s economic development and employment opportunities.
According to the World Bank survey Doing Business 2009, 69 countries have no minimum capital requirement for the establishment of a new company, while 10 other countries have capital requirements that are close to zero in proportion to per capita GNP, such as Singapore’s minimum requirement of just S$2.00. Although Taiwan has reduced its minimum capital requirement for the establishment of a limited liability company from NT$1 million to NT$500,000, it is still ranked a lowly 150th out of 181 countries by the World Bank in this respect. Hence, the CEPD has suggested that the Company Act be amended to abolish the minimum capital requirement.
The Executive Yuan has already listed this as one of the priority items for regulatory reform, and has requested the MOEA to draw up the necessary draft revision of the Company Act by the end of 2008, with sights set on expediting the requisite amendment of the law. Other important measures on the government’s agenda for simplifying company startup application procedures include: Revising the Enforcement Rules of the Labor Insurance Act, speeding up the abolishment of the system of unified certification for profit-seeking enterprises, simplifying the procedures for extending coverage of labor and health insurance, reviewing the content of the Directions for Reviewing Work Rules, and integrating data transmission between different government agencies. It is hoped that the above regulatory easing and administrative streamlining will further enhance Taiwan’s business environment and make it easier for foreign businesses to operate in Taiwan.