|Company Act Article 112Aug. 1, 2018|
A company shall, after its losses have been covered and all taxes and dues have been paid and at the time of allocating surplus profits, first set aside ten percent of such profits as a legal reserve. However when the legal reserve amounts to the authorized capital, this shall not apply.
Aside from the aforesaid legal reserve, a company may, by the provisions of its Articles of Incorporation or with the consent of two thirds or more of the voting shares of all shareholders, appropriate another sum as a special reserve.
Article 239 and Item Two, Paragraph One and Paragraph Three of Article 241 shall apply mutatis mutandis to a limited company.
Responsible persons of a limited company who fail to set aside a legal reserve in violation of the provisions in Paragraph One, shall be imposed with a fine of not less than NT$ 20,000 but not more than NT$ 100,000.
|Company Act Article 239Aug. 1, 2018|
The legal reserve and the capital reserve shall not be used except for making good the deficit (or loss) of the company; however, this clause shall not apply to the case set forth in Article 241 hereof or as otherwise provided for in the law.
A company shall not use the capital reserve to make good its capital loss, unless the surplus reserve is insufficient to make good such loss.
|Company Act Article 241Aug. 1, 2018|
Where a company incurs no loss, it may, pursuant to a resolution to be adopted by a shareholders’ meeting as required in Paragraphs One to Three of the preceding Article, distribute its legal reserve and the following capital reserve, in whole or in part, by issuing new shares which shall be distributable as dividend shares to its original shareholders in proportion to the number of shares being held by each of them or by cash:
1. the income derived from the issuance of new shares at a premium;
The provisions set out in Paragraph Four and Paragraph Five of the preceding Article shall be applicable mutatis mutandis to the capitalization of reserves to be effected under the preceding Paragraph.
Where legal reserve is distributed by issuing new shares or by cash, only the portion of legal reserve which exceeds 25 percent of the paid-in capital may be distributed.
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Provided by Kingdoms Law