Legal Study on Services as Capital Contributions to Companies Limited by Shares

• Main Authors: WU, KUO-YI, 吳國怡
• Other Authors: HU, SHAO-WEN
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/gdd45r

碩士 === 東吳大學 === 法律學系 === 105 === Due to competition from all over the world, traditional advantages and opportunities for industries in Taiwan have decreased rapidly and even disappeared gradually. In order to boost Taiwan’s economy and to encourage entrepreneurship, the government has recently made several policies friendly to startups that have new products or new business models. However, almost all the entrepreneurs of startups still have troubles to get enough funding for their business due to the restrictions and lack of flexibility of the corporate laws in Taiwan. When the entrepreneurs try to raise funds for their startups, they are most likely to face a dilemma: get the money but dilute their share percentage, or wait for the real angel investors. The Legislative Yuan has passed “Section 13 Close Company” of the Company Act in 2015. The new provisions provide more flexibility for the entrepreneurs and investors to start-up a close company. For example, under Article 356-3 Paragraph II, equity capital to be contributed other than cash by the promoters may be in the form of assets required in the business of a close company, technical know-how, service or goodwill, provided, however, that such service or goodwill shall not exceed a certain percentage of the total shares issued by a close company. Nowadays services of shareholders could be capital contribution to a close company, but the company will still have problems to measure the value of such services without a proper appraisal mechanism. Moreover, as long as a company is treated as a separate legal person from its shareholders, it will be responsible for its debts and obligations on its own. If a shareholder who promised to contribute his services in exchange of the company’s shares deliberately failed to provide the services afterwards, it might be difficult to protect other shareholders and the creditors of the company under the current legal scheme. This thesis studied several issues regarding services as capital contributions to companies limited by shares. After pointing out the questions and controversies under the new Section of the Company Act, this thesis tried to make comparative analysis of the laws and regulations with regard to services as capital contributions among Taiwan, the United States, Japan and China. Accordingly, this thesis then provided following suggestions for the future amendment of the Company Act in Taiwan. First of all, a company may place shares issued for future services in escrow or make other arrangements to restrict the transfer of the shares. It may also credit distributions in respect of the shares against their purchase price until the services are performed. If the services are not performed, the shares escrowed or restricted and the distributions credited may be cancelled in whole or in part. Furthermore, if the promised services are not fully provided, the creditors and other shareholders of the company may pierce the corporate veil to protect their rights.