A resolution passed by shareholders at a shareholders’ meeting (a “Shareholders’ Meeting Resolution”[1]) of a company limited by shares in Taiwan (a “Company”) is one kind of a Company’s formal decisions made by the Company’s shareholders (“Shareholders”).  Under the Company Act in Taiwan (the “Act”),[2] there are three types of Shareholders’ Meeting Resolutions: (1) an ordinary resolution; (2) a special resolution; and (3) a tentative resolution.  The Act has stated the requirements for these three types of Shareholders’ Meeting Resolutions, what situation requires a Shareholders’ Meeting Resolution, and what types of Shareholders’ Meeting Resolution will apply in different situations.  The following presents an overview of these three types of Shareholders’ Meeting Resolutions.
 
I.  Ordinary Resolutions
 
Under the Act, an ordinary resolution passed by Shareholders at a shareholders’ meeting of a Company (an “Ordinary Resolution”) refers to a resolution passed by a majority vote (i.e., more than fifty percent (50%)) of Shareholders representing more than one-half of the Company’s outstanding shares at a shareholders’ meeting of a Company (a “Shareholders’ Meeting”).[3]  In other words, the quorum requirement for an Ordinary Resolution requires the presence of Shareholders “represent[ing] more than one-half of the total number of voting shares” at a Shareholders’ Meeting.[4]  The voting requirement for an Ordinary Resolution requires more than fifty percent (50%) of the votes cast by Shareholders attending the Shareholders’ Meeting.[5]  Unless the Act provides otherwise, an Ordinary Resolution is the type of Shareholders’ Meeting Resolutions used for most matters required to be approved by Shareholders.[6]
 
II.  Special Resolutions
 
A special resolution passed by Shareholders at a shareholders’ meeting of a Company (a “Special Resolution”) is a kind of resolution passed by a majority vote of Shareholders representing more than two-thirds of the Company’s outstanding shares at a Shareholders’ Meeting.[7]  In general, the quorum requirement for a Special Resolution requires the presence of Shareholders representing more than two-thirds of the total number of voting shares of a Company.[8]  The voting requirement for a Special Resolution is the same as the voting requirement for an Ordinary Resolution.[9]  If a Company is a public company, the presence of Shareholders representing more than one-half of the total number of voting shares at a Shareholders’ Meeting is sufficient to meet the quorum requirement for a Special Resolution.[10]  In that case, the voting requirement for such a Special Resolution requires more than two-thirds of the votes cast by Shareholders attending the said Shareholders’ Meeting.[11]
 
Under the Act, a Special Resolution is required for some situations which involve a critical decision of a Company, or which affect or may affect the interest of the Company or Shareholders.  For instance, a Special Resolution is required for Shareholders’ approval on any of the following matters of a Company: (1) a lift of restrictions on the Company’s investment in other companies;[12] (2) the conversion of “all of the issued par value shares [of the Company] into no-par value shares;”[13] (3) an application to the competent authority for an approval of ceasing the Company’s status as a public company;[14] (4) an amendment to the Company’s “Articles of Incorporation prejudicial to the privileges of” of Shareholders holding special shares issued by the Company;[15] (5) the Company’s engagement in any of the material transactions specified in the Act;[16] (6) the removal of a board of director (a “Director”) or a supervisor of the Company;[17] (7) a lift of the non-compete restrictions on a Director;[18] (8) the distribution of the Company’s surplus profit “in the form of new shares to be issued by the [Company];”[19] (9) the distribution of the Company’s “legal reserve” or “capital reserve” “by issuing new shares which shall be distributable as dividend shares to [Shareholders];”[20] (10) the Company’s issuance of new shares with restrictions subscribed by the Company’s employees;[21] (11) an amendment to the Company’s Articles of Incorporation;[22] or (12) the dissolution, consolidation, merger, or split-up of the Company.[23]
 
III.  Tentative Resolutions
 
A tentative resolution passed by Shareholders at a shareholders’ meeting of a Company (a “Tentative Resolution”) is an alternative option for Shareholders who wish to pass an Ordinary Resolution but fail to meet the quorum requirement for an Ordinary Resolution at a Shareholders’ Meeting.  Under the Act, if Shareholders attending a Shareholders’ Meeting represent “one-third or more of the total number” of the Company’s outstanding shares but the number of those Shareholders “does not constitute the quorum” for an Ordinary Resolution, those Shareholders may pass a Tentative Resolution by a majority vote of Shareholders present at the said Shareholders’ Meeting.[24]  The Act requires that (1) each Shareholder of the Company should be given a notice of such a Tentative Resolution; and (2) another Shareholders’ Meeting should be convened “within on month” following the passing of such a Tentative Resolution.[25]  If such a Tentative Resolution “is again adopted” by a majority vote of Shareholders representing one-third or more of the total number of the Company’s outstanding shares at another Shareholders’ Meeting (convened within one month following the passing of such a Tentative Resolution), such a Tentative Resolution “shall be deemed to be” an Ordinary Resolution.[26]  A Tentative Resolution only applies to matters requiring an Ordinary Resolution.  There is no Tentative Resolution for any matter requiring a Special Resolution.
 
IV.  Conclusion
 
“Ordinary Resolution,” “Special Resolution,” and “Tentative Resolution” are three types of Shareholders’ Meeting Resolutions set forth under the Act.  Unless otherwise provided by the Act, an Ordinary Resolution is used for most matters required to be approved by a Shareholders’ Meeting Resolution.[27]  A resolution passed by a majority vote of Shareholders representing more than one-half of the Company’s outstanding shares at a Shareholders’ Meeting constitutes an Ordinary Resolution.[28]  Shareholders who wish to pass an Ordinary Resolution but do not meet the quorum requirement for an Ordinary Resolution may consider passing a Tentative Resolution at a Shareholders’ Meeting; provided that those Shareholders represent one-third or more of the total number of the Company’s outstanding shares.[29]  A Tentative Resolution will be deemed to be an Ordinary Resolution if such a Tentative Resolution is again adopted by a majority vote of Shareholders representing one-third or more of the total number of the Company’s outstanding shares at another Shareholders’ Meeting convened within one month following the passing of such a Tentative Resolution.[30]  On the other hand, a Special Resolution refers to a resolution passed by a majority vote of Shareholders representing more than two-thirds of the Company’s outstanding shares at a Shareholders’ Meeting.  Under the Act, a Special Resolution is required for some situations which involve a critical decision of a Company, or which affect or may affect the interest of the Company or Shareholders.  However, a Tentative Resolution does not apply to any matter requiring a Special Resolution.
 
 

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