Common Violation Cases

• Failure to check, record, and prepare working papers in accordance with the method for accountants to check and verify the company's registered capital

• Explanation on relevant letters of non-compliance property offset

• Relevant explanations for non-compliance with capital reduction

Item 1 , Article 7 of the Measures for Accountants to Check the Registered Capital of Visa Companies

• The accountant is entrusted to check the registration of the establishment or merger, division, acquisition, share conversion, share exchange, increase of paid-in capital, etc. of the visa company. Stock payment, other properties, dividends, statutory surplus reserves, capital reserves, mergers, divisions, acquisitions, share conversions, new shares with restricted employee rights) and the amount of issued shares, the number of issued shares and the amount of capital, including For the premium or discount, the amount of U.S. stocks issued and the accounting treatment method shall be stated, and the total number of issued shares and capital amount before and after the capital increase shall be stated.

Capital verification report (sample)

(Effective from January 1 , 2013 )

1. ○○ Co., Ltd. (unified number: 00000000) prepared the capital change statement and ○○ attached table on 00.00. Indicate the name of the attached table), which has been checked by our accountants. The preparation of the above statement is the responsibility of the company's management , and the accountant's responsibility is to express an opinion on the above statement based on the audit results.

2. Our accountant plans and executes the audit work in accordance with the "Accountants Checking the Registered Capital Amount of a Visa Company" to reasonably ascertain whether there is any material misrepresentation in the company's statement of capital changes. The total registered capital of the company is NT$ (hereinafter the same) 000 yuan, which is divided into 00 shares, 00 yuan per share, 00 shares issued, and the paid-in capital is 000 yuan. It was decided to increase the capital by 000 yuan, and the board of directors resolved to issue xx new shares, which were issued at a premium (or discount) of 0 yuan per share. Shares of ○ yuan, the paid-in capital increased to 000 yuan, divided into ○○ shares, each share ○ yuan. The payment is made by the shareholder in cash (or the shareholder's creditor's right to the company or the company's required property...etc.) 000 yuan, as detailed in the shareholder's cash payment schedule (or creditor's right offset payment schedule or property offset payment schedule, etc.) . (Note: The above-mentioned share funds have been deposited in the bank; the share funds have been used; see the usage schedule for details; if there is a premium or discount, the accounting treatment method should be stated separately; if it is a merger or acquisition, the accounting treatment method adopted should be stated; In the case of pricing, stock offsets, and other property offsets, it shall be stated that the relevant properties have been legally registered with the company or delivered to the company before the establishment or the capital increase benchmark date, and the valuation standard shall be stated.)

3. As a result of our accountant's inspection, the company has indeed received enough capital for this increase in paid-in capital. According to our accountant's opinion, the capital change statement and ○○ attached table mentioned in the first paragraph (note: specify the name of the attached table) are Compiled in accordance with the "Regulations for Accountants to Check and Verify the Registered Capital of a Visa Company", it is sufficient to express the situation of the company's capital increase this time.

This review report is only for the company to register with the competent authority for the change of capital, and shall not be used for other purposes.

○○Accounting firm

Accountant: (signature and seal)

Office address:

Telephone:

Date of visa check: 00-00-00-00, Republic of China

( This example is for reference only )

Explanation on property offset

When a company is initiated and established, and the promoters use the property required by the company to offset the payment for shares, should the paid property be transferred to the company under establishment?

• 1. Letter No. 122 of Chen Yanzi from the Congress Office of the Rehabilitation Committee on May 19 , 1994 [ 94] .

• 2. In accordance with the May 31 , 1994 research and discussion of "company registration doubts and other related matters, the resolution is as follows: when the company initiates the establishment or increases the capital to issue new shares, the promoters or shareholders use the property required by the company to offset the payment of shares, if If land is used to offset the payment, the company should go through the land ownership transfer registration procedures before applying for company registration. As for other assets that are used to offset the payment of shares, such as stocks, machinery and equipment, etc., the relevant information should also be reminded in the same way. Evidence of property transfer or delivery .

• Letter No. 09402410720 of Jingshangzi dated June 6 , 1994

Property Offset Principle

• When a company initiates the establishment or increases its capital to issue new shares, the promoters or shareholders use the property required by the company to offset the share payment. If the payment involves land, the company must first implement the land ownership transfer registration procedures before applying for company registration. As for other property that is used to offset the payment of shares, such as stocks, machinery and equipment, etc., similarly, relevant proof documents of property transfer or delivery should also be presented. Please check the photo

• Letter No. 09402410621 dated June 7 , 1994 from the Ministry of Economic Affairs

Shareholders use their property to pay for the shares, and the registration date of property ownership transfer

• 1. When the company increases its capital and issues new shares, the shareholders shall use the property required by the company to offset the share payment. If land is involved in the offset, the company shall first implement the land ownership transfer registration procedures before applying for company registration. Headquarters on June 7 , 1994 , the Shang Zi No. 09402410621 letter was put on record. Accordingly, subscription shareholders should complete all equity transfer procedures before the base date of capital increase (including the day) , in order to comply with the principle of capital confirmation, and explain in advance.

• 2. In addition, since the property to be paid for the capital increase inquired is part of the capital increase, the accountant shall state in the capital increase verification report whether the transfer procedure of the property to be verified has been completed, and describe it.

• Letter No. 09802019760 of the Ministry of Economic Affairs dated February 20 , 1998

Doubts about the company's capital increase

• 1. According to the company’s establishment and issuance of new shares, the property required by the company’s business can be used to offset the share payment (refer to the letter No. 0930093750 of the Ministry of Finance on June 9 , 1993 ). If the shareholder pays the share payment with land, the company should The company registration can only be applied for after the land ownership transfer registration procedure has been carried out first (refer to Jingshangzi No. 09402410621 letter dated June 7 , 1994 ). In addition, the valuation of land depends on whether it exceeds 20% of the current value of the announcement as the standard (refer to Jingshangzi No. 08291 letter dated March 28 , 1977). Article 6 , Item 5 of the Measures for Checking the Capital Amount, obtain the appraisal price opinions from relevant groups or experts.

• 2. In addition, the company's resolution to increase capital and issue new shares shall be subject to a special resolution of the board of directors, and the amount of its property to offset the share payment shall also be approved by a resolution of the board of directors, and there is no requirement for additional opinions from supervisors.

• 3. As far as whether the fair value of the inquired real estate can be partly allocated to the capital reserve, it should depend on whether there is a "premium issue" when the company increases its capital and issues new shares, and it should be explained.

• Letter No. 09902176280 of the Ministry of Economic Affairs on January 7 , 2009

Questions about the application of the company's required technology to offset the payment of shares for the establishment of a joint stock limited company

• According to the provisions of Article 131 of the Company Law : "When the promoters subscribe for the shares to be issued for the first time, they shall immediately pay in full and elect directors and supervisors (item 1 ). The share payment in item 1 may be The property needed for the company’s business is offset (item 3 ). ” This time , the “property needed for the business” stipulated in item 3 of Article 131 of the Company Law should include technology (Jingshangzi No. reference to the letter). Therefore, when a company is initiated and established, and the promoters' share capital is offset by the technology required by the company's business, the offset amount may be determined in accordance with the provisions of Article 131 , Item 1 above, after the promoters have confirmed the paid-up share capital and The provisions of Article 156, Paragraph 7 shall not apply to decisions made during the selection and appointment of directors and supervisors.

• Letter No. 10400063840 of the Ministry of Economic Affairs dated July 30 , 2014

• Note : Item 3 of Article 131 of the Company Law implemented on November 1 , 2017 has been amended to read: "In addition to cash, the promoter's capital contribution may be offset by property and technology required by the company's business."; former Article 156 Item 7 of Article 7 is amended to be listed in Item 5 , and amended to read: "In addition to cash, the shareholder's capital contribution may be offset against the company's monetary claims, property or technology required by the company's business; the offset amount shall be By resolution of the board of directors."

When a limited company applies for capital increase and amendment of articles of association, its shareholders use real estate (construction sites and buildings) to offset the payment of shares, because the real estate has mortgage loans that have not been paid off, whether it meets the relevant regulations of company registration

• Check the Department's letter No. 89205017 dated March 23 , 1989 , on the land in question that has been mortgaged, and whether the amount after deducting the mortgage loan can be used as a price to offset the stock payment without canceling the mortgage first In the section on rights, our company believes that if it is verified to be true, there is no unreasonable reply. Therefore, in practice, the practice of deducting the amount of the mortgage on the real estate that has been mortgaged and then paying the price to pay for the stock is to consider that if the mortgagee implements the mortgage, the value of the property will be reduced. Affects company capital indeed. Regardless of whether the debtor of the mortgage is the mortgagor or the company that accepts the property payment, there is no difference in the risk of depreciation of the property value it suffers due to the exercise of the mortgage. Therefore, this case does not seem to exclude the application of the above-mentioned letter, but the specific case should still be considered by your government in its own right.

• Letter No. 10402129550 of the Ministry of Economic Affairs dated December 11 , 2014

Land Mortgage Exception

If the company is divided and the real estate transferred to the company is acquired, it is not necessary to complete the transfer registration before the company is registered.

• 1. According to the letter No. 09400854870 granted by your office on August 1 , 1994 and the resolution of the meeting on "company registration doubts and other related matters" held by the headquarters on September 13 , 1994 .

• 2. For companies that acquire property transferred from companies through mergers, divisions, acquisitions, and share conversions, there is a land value-added tax due to Articles 25 and 27 of the Enterprise Merger and Acquisition Law and Articles 29 and 30 of the Implementation Rules for the Promotion of Industrial Upgrade Regulations, etc. The provision of deposit or exemption of deed tax, so when applying for company registration, the application of the Ministry's June 7 , 1994 Jingshangzi No. 09402410621 letter interpretation can be excluded.

• Letter No. 09402419530 dated September 15 , 1994 from the Ministry of Economic Affairs

Stocks should be transferred first

• September 13 , 1994 , the Ministry of Economic Affairs discussed the "company law and company registration doubts" meeting

• Resolution: The promoters should use the stock price to offset the payment of shares, which should be handled in accordance with Article 164 and Article 165 of the Company Law , and in accordance with the provisions of Article 104 and Article 150 of the Land Registration Rules, with "○○Representative of the Company's Preparatory Office○ ○○” is recorded on the back of the stock certificate and the shareholder register. After the company completes the establishment registration and obtains legal personality, it will be renamed as “○○ Company”

• .

Shareholders use the shares of other legal person companies to offset the payment of shares, and the method of price recognition conforms to the provisions of Article 7 , Item 2 , Item 4 of the Measures for Accountants to Check and Verify the Company's Registered Capital

• 1. In accordance with Article 7 , Subparagraph 2 , Subparagraph 4 , Subparagraph 1 of the Measures for Accountants to Check and Verify the Registered Capital of Companies, unlisted, unlisted, or unopened company stocks shall be valued on the basis of the company's net asset value on the date of measurement .

• 2. In this case, "shareholders use the shares of other legal person companies to offset the payment of shares, but the offset amount is based on the net value in the balance sheet of the legal person company plus the amount of land and building appraisal; However, the appraised value of the revalued land and houses in the balance sheet is not shown in the financial statements" section, according to the commercial accounting method, there are no assets that have not been revalued according to the appraisal report. For specific cases, please weigh and decide according to your position.

• Letter No. 10402422910 of the Ministry of Economic Affairs on August 31 , 2014

Technical pricing

• 1. Letter No. 00015 of Fugui Company dated February 26 , 1992 .

• 2. According to Article 156 of the Company Law: "In addition to cash, shareholders' capital contributions can be offset by all monetary claims against the company, or technology required by the company, and goodwill, but the offset amount must be approved by the board of directors. Subject to the restrictions of Article 272. " As for the question of whether the management technology can be paid for as a price, the company law has not clearly defined the scope of the word "technology". The ownership, use and profit rights of the technology will not be restricted by the resignation, death or change of the technology shareholder, which will affect the acquisition of the technology invested.

• 3. In addition, in accordance with Article 6 , Item 3 of the Measures for Checking the Company's Application for Registration of Capital, "Where technical pricing, stock offsets, or other properties offset the payment of shares, the type, quantity, price, or valuation standard of the company's shareholders' names and properties shall be checked. Shares or certificates issued by the company." Therefore, the rationality of technical valuation standards should be checked by an accountant and an audit opinion should be issued.

• Letter No. 09202046630 dated March 24 , 1992 from the Ministry of Economic Affairs

Subscribers of new shares of closed companies can contribute capital with labor services , not limited to promoters

• 1. In accordance with Article 356-3 , Subparagraphs 2 and 3 of the Company Law, the capital contributions of promoters may be offset by labor services required by the company's business, and must be approved by all shareholders. The type and offset shall be specified in the articles of association The amount to be charged and the number of shares issued by the company. However, the number of shares offset by labor services shall not exceed a certain percentage of the total number of shares issued by the company. Paragraph 2 of Article 356-12 of the same Act stipulates that the capital contribution methods of subscribers for new shares shall apply mutatis mutandis to Article 356-3 , Items 2 to 4 .

• 2. Next, according to the Announcement of Jingshangzi No. 10802409490 dated June 4 , 2018 , the total number of shares issued by the company referred to in Item 2 of Article 356-3 of the Company Law shall be a certain percentage of the number of capital-contributing shares for labor services, and shall be included in the amount of paid-in capital. For the portion less than NT$ 30 million, the number of shares for which labor services are used to offset the capital contribution shall not exceed one-half of the total number of shares issued by the company for that part ; The number of shares used as capital contribution shall not exceed one quarter of the total number of shares issued by the company. Therefore, when the closed company in question issues shares for the second time, within the ratio limit of the above-mentioned announcement, it is still possible to subscribe for shares with labor investment.

• Letter No. 10902014350 of the Ministry of Economic Affairs on April 9 , 109

The capital reduction and return of property, the registration of the company's capital reduction should be accompanied by documents

• letter explanation

• company law

• special stock

Letter No. 09702408501 dated April 23 , 1997

1. According to the interpretation of Jingshang Zi No. 09700511280 on January 29 , 1997 , the Ministry of the Case stipulates that it is not uncommon for the company to reduce capital and return the share payment with property other than cash. The property to be returned and the amount to be replaced shall be subject to a resolution of the shareholders' meeting and the consent of the shareholder receiving the property. The value of the property and the offset amount shall be submitted by the board of directors to an accountant for verification and approval prior to the shareholders' meeting. Accordingly, the company shall reduce capital and return property, and the following documents shall be attached for registration of capital reduction:

• (1) One application form.

• (2) Approval letter from other agencies

• (3) Articles of association of the company [exempt from attachment if revision is not involved].

• (4) Comparison table of amendments to the Articles of Association [exempt for those not involving amendments].

• (5) Minutes of the shareholders' meeting [for the discussion of the capital reduction proposal, the property returned and the amount offset should be stated first, and the board of directors has sent it to an accountant for verification and certification before the shareholders' meeting; and the property returned and offset for the capital reduction Amount resolution].

• (6) The company issues a statement stating that the returned property and the offset amount are agreed by the shareholder who received the property.

• (7) Minutes of the board meeting and a photocopy of the attendance book [exempt if the capital reduction base date of the resolution of the shareholders' meeting is passed].

• (8) Register of shareholders [for a public company, a register of directors, supervisors, and shareholders holding more than 10% of the total shares shall be sent].

• (9) Accountant's capital inspection report and its attachments [Should check whether the property returned by the company conforms to the resolution of the shareholders' meeting and enter it into the account according to regulations].

• (10) A power of attorney to entrust an accountant to certify.

• (11) 2 copies of the company change registration form.

• (12) Registration fee: 1,000 yuan.

2. In addition, for the company to reduce capital and return property, according to the provisions of the above letter, it should implement the procedure of obtaining the consent of the shareholder who received the property, and the company should still obtain the consent of the shareholder who received the property; It should be dealt with through judicial channels and should be explained.

Article 168 of the Companies Act

• The company shall not cancel its shares unless it reduces its capital in accordance with the resolution of the shareholders' meeting; the reduction of capital shall be made in accordance with the proportion of shares held by shareholders. However, this is not the case where this law or other laws provide otherwise.

• If the company reduces its capital, it may return the share price with property other than cash; the property to be returned and the amount to be replaced shall be resolved by the shareholders' meeting and approved by the shareholder receiving the property.

• The board of directors shall submit the value of the property mentioned in the preceding paragraph and the offset amount to an accountant for verification and verification prior to the shareholders' meeting.

• Any person in charge of the company who violates the first three provisions shall be fined not less than NT$20,000 but not more than NT$100,000.

△ The capital reduction should be reduced according to the proportion of shares held by shareholders

• 1. According to Article 168 , Item 1 of the Company Law: "The company shall not cancel its shares unless it reduces its capital in accordance with the resolution of the shareholders' meeting; the reduction of capital shall be made in accordance with the proportion of shares held by shareholders. However, this Act or other laws provide otherwise. The provisions of this proviso refer to the capital reduction stipulated in this law, such as the proviso of Article 167 , Item 1 , and the shares recovered or purchased under Article 186. If they have not been sold for more than 6 months, they are deemed Capital reduction, etc. due to unissued shares of the company; capital reduction as otherwise provided by other laws, such as capital reduction under Article 28-2 , Item 4 of the Securities and Exchange Act. As for the commercial accounting law system to regulate the handling of commercial accounting affairs, Article 27 of the Commercial Accounting Treatment Standards does not provide for capital reduction matters, and it is not otherwise stipulated by other laws mentioned in the proviso of Article 168 , Item 1 of this Law. Explain first.

• 2. Where a company issues special shares, the rights and obligations of the special shares shall be specified in the articles of incorporation with respect to the matters stipulated in Article 157 of this Act. This article does not exclude the application of special shares to the shareholders in accordance with Article 168 , Item 1 of this Act. The ratio reduction regulation means that when the company reduces its capital, special shares with the nature of liabilities shall still be handled in accordance with the provisions of the Department's August 8 , 1990 Jingshangzi No. 09002168930 letter.

• Letter No. 10702000390 of the Ministry of Economic Affairs on January 8 , 2017

△ The reduction of capital does not matter whether the shares held by shareholders are special shares or ordinary shares, and the proportional reduction should be calculated on the basis of one share

• According to Article 168 , Item 1 of the Company Law: "A company shall not sell its shares except in accordance with the provisions of capital reduction; capital reduction shall be reduced in accordance with the proportion of shares held by shareholders, except for the provisions of this Law", and the shares held by shareholders are Preferred stock or common stock is irrelevant. In addition, according to the provisions of the Ministry of Commerce No. 03910 on February 11 , 1966 , it is briefly stated: "The capital of a joint stock company shall be divided into shares, and the amount of each share shall be equal. Therefore, one share is the smallest unit of capital formation...", Therefore, the reduction in the proportion of shares held by shareholders shall be calculated on the basis of one share.

• Letter No. 09002168930 dated August 8 , 1990 from the Ministry of Economic Affairs

Article 356-3 _ _

• The promoters may establish a closed joint stock limited company with unanimous consent, and shall fully subscribe for the shares to be issued for the first time.

• In addition to cash, the promoter's capital contribution may be offset by property, technology or labor services required by the company's business. However, the number of shares offset by labor services shall not exceed a certain percentage of the total number of shares issued by the company.

• The certain ratio in the preceding paragraph shall be determined by the central competent authority.

• Contributions made by technology or labor services shall be approved by all shareholders, and the articles of association shall specify the type, offset amount, and the number of shares granted by the company; The information website of the central competent authority.

• The method for promoters to appoint directors and supervisors shall apply the provisions of Article 198 mutatis mutandis, unless otherwise stipulated in the articles of incorporation.

• Articles 132 to 149 and Articles 151 to 153 do not apply to the establishment of a company.

• The method of electing and appointing directors and supervisors by the general meeting of shareholders shall be in accordance with Article 198, unless otherwise stipulated in the articles of incorporation.

Shareholders of a closed joint stock limited company who contributed capital with labor services have not provided labor services from the beginning, and it is doubtful whether they can withdraw their shares in accordance with Article 167 , Paragraph 2 of the Company Law.

• According to the Ministry of Finance No. 10700566800 letter on May 3 , 107 : "...According to the provisions of Article 356-3 of the Company Law, the shareholders of a closed joint stock limited company may contribute capital with labor services or credit. If capital contribution is made in the form of labor services, the labor services What is the period of performance? It should be agreed in the contract between the company and the shareholder. If the shareholder fails to perform according to the agreed content, it is a breach of the contract. If there is any dispute, it should be resolved through judicial channels. The dispute is a breach of the contract and should be resolved through judicial channels.

• Shareholders who did not provide labor services according to the inquiry in the communication did not provide labor services from the beginning, and love to request the return of the labor service contributors with a letter of deposit... and submit the section of the letter of deposit of both parties. If the company is voluntarily returned by shareholders To obtain your own shares, you should go through the registration of capital reduction and capital reduction for canceling shares in accordance with the intention of Jingshangzi No. 09202100410 letter dated May 15 , 1992. However, whether this case is indeed in line with the above-mentioned intentions, please carefully review your office.

• Letter No. 10800020020 of the Ministry of Economic Affairs dated April 11 , 2018

The capital reduction of a locked-up joint stock limited company funded by labor services , and whether there is a case of false registration of funds in Article 9 , Item 1 of the Company Law.

• 1. Check Article 356-3 , Item 2 of the Company Law (and Article 356-12 , Item 2 of the same law), which stipulates that shareholders may contribute capital to them with labor services required by the company; and Article 9 , Item 1 of the same law It is a penalty prescribed for the prevention of false companies and economic crimes. Therefore, the shareholders of a closed joint stock limited company use labor services as capital contributions, which is not the same as the false provision in Article 9 , Item 1 of the same law.

• 2. In addition, the capital reduction of a closed joint stock limited company shall still be subject to the provisions of Article 168 of the Company Law, and the capital contribution of individual shareholders shall not be reduced only; the capital reduction of other companies shall be carried out in accordance with the previous regulations, and the labor service capital contribution content contained in the company's articles of association shall be amended at the same time.

• Letter No. 10700100870 of the Ministry of Economic Affairs on December 18 , 2018

Capital reduction during the performance period of labor service capital contribution of a closed joint stock limited company

• proportional reduction

• Cash back or reduced labor

• The content of the labor service investment contained in the articles of association of the company shall be amended at the same time

• The number of shares offset by labor services shall not exceed a certain percentage of the total number of shares issued by the company.