15 October, 2008
Legislation to Remove Minimum Company Capitalization
The Department of Commerce under the Ministry of Economic Affairs plans to introduce a bill to eliminate the minimum capital requirements for limited companies and companies limited by shares. As of 24 April 2008, the minimum capital for a limited company was NT$250,000 while a company limited by shares required NT$500,000 in start up funds. The proposed bill, if adopted by the Ministry after consultations with experts, would amend Articles 100 and 151 of Taiwan's Company Act to eliminate these minimum investments entirely. Approval by the Legislative Yuan would still be required for the proposed changes to take effect.
The new proposals are a response to Taiwan's poor showing in the World Bank's Doing Business 2009 report released on 10 September. In the report, Taiwan fell three places from 58 in the 2008 report to 61 in the 2009 report, in part due to a low score on the Report's Factor 119 Business Startup.
The quick response shows the sensitivity of Taiwan's economic authorities to such reports and suggests that one way for international business to effect change in Taiwan's business environment would be to work actively with organizations like the World Bank to ensure that these organizations have accurate information on issues of concern.
It should be noted that the Council of Labor Affairs currently will grant work authorization for foreign employees to new companies without reviewing the company's capitalization in the first year. Thereafter, the company will need NT$5 million in annual sales or sales equivalent to five times the company's capitalization to receive work authorization for foreign employees. Additional documentation may be required for companies with relatively low capitalization.
