Taiwan - Opinions And Views in Practice / Legal News Update September 2019.

Legal News & Analysis - Asia Pacific - Taiwan - Labour & Employment - Intellectual Property

9 October, 2019


The Supreme Court held that the employer may, without advance notice, terminate the employment of an employee who commits a material breach of the employment agreement or work rules by disclosing the employer’s trade secrets


The Supreme Court in a recent decision (Case Ref. 107-Tai-Shang-Zhi-No.1388) held that the employer may without advance notice terminate the employment of an employee who commits a material breach of the employment agreement or work rules by disclosing the employer’s trade secrets.  The basic facts of the case are as follows: During the defendant’s employment at the plaintiff company (the “Employer”), a civil copyright infringement action was filed against the Employer by a third-party company, of which the defendant’s wife was the legal representative.  The defendant (i.e., Employee) obtained certain Employer’s trade secrets relevant to the copyright infringement action and handed the information to his wife for facilitating plaintiff’s prosecution of the action.  The court held that such Employee’s conduct violated the Employer’s work rules and the confidentiality agreement signed between him and the Employer, and thus breached the duty of loyalty that he owed to the Employer.  As such, the Employee committed “a material breach of employment agreement or work rules” set forth in Subparagraph 4 of Paragraph 1, Article 12 of the Labor Standards Act, and the Employer was therefore entitled to terminate the employment without advance notice pursuant to the law. (Max Lee)


The Ministry of Economic Affairs (“MOEA”) issued a letter interpretation on June 5, 2019 regarding exercising voting right by shareholders of a publicly traded company under Paragraph 3, Article 181 of Company Act.


The MOEA’s interpretation indicates that by virtue of the cumulative voting system set forth in Article 198 of Company Act, the number of votes that each share is entitled to cast shall be the same as the number of directors to be elected, and such votes may be cast for a single candidate or be split among several candidates.  There is no express restriction on how many candidates can the votes from one share be allocated.  Therefore, the principle of cumulative voiting is not violated if the votes that one share is entitled to cast are allocated to a number of candidates that is more than the number of directors to be elected. (Yijia Chao)


MOEA issued a letter interpretation on June 14, 2019 concerning the special shares issues under Subparagraph 5 of Paragraph 1, Article 157 of the Company Act


The MOEA’s letter indicates that since Subparagraph 5 of Paragraph 1, Article 157 of the Company Act refers to certain number of special shareholders being elected to be directors, the qualified directors so elected must be special shareholders.  The letter further indicates that according to Paragraph 1 of Article 27 of the Company Act, the elected director is the juristic person shareholder (special shareholder), and not the natural person representative appointed by such juristice person, who is only an agent of such juristic person to perform its duties; and therefore, the juristic person director may appoint a natural person who is not a special shareholder to serve as its representative to perform the director’s duties. (Yijia Chao)


The FSC issued a letter interpretation on June 21, 2019 indicating that the Exchange Traded Note (ETN) which is authorized to issue by the FSC, traded on the securities markets, and purchased and sold in cash by investors, is the marketable securities referred to in Paragraph 1(6) of Article 146-1 of the Insurance Act, namely, securities which is approved by other competent authority for insurance enterprises to purchase  Moreover, the total amount of investment by an insurance enterprise in each ETN may not exceed 10 percent of the total issued units of such securities. (Yijia Chao) 


On July, 18, 2019, the FSC issued a letter interpretation (Ref. No.: Jin-Guan-Zheng-Tou–Zhi No. 1080321527), indicating that the financial institutions who are commissioned by an offshore fund to conduct private placement to qualified natural persons, juristic persons, or funds under Paragraphs 6 and 7 of Article 52 of the Regulations Governing Offshore Funds may engage in private placements of offshore funds through money trust by contracting with trust enterprises, provided:


(1) that the qualified trust enterprise shall meet the requirements set forth in Article 19 of the Regulations Governing Offshore Funds;


(2) the commissioned financial institution and the trust enterprise shall enter into written contract to set forth the rights and obligations of the parties;


(3) the commissioned financial institution shall still bear the final responsibility for verifying the qualifications of the subscribers, and shall establish relevant risk monitoring and management measures in its internal control systems.(Linda Huang) 


The FSC recently indicated that, for encouraging young people and individual investors to invest in stock market and bringing more life to the odd-lot trading market, the FSC had, in addition to maintaining the current after-market odd-lot trading system (Paragraph 1, Article 3 of Taiwan Stock Exchange Corporation Regulations Governing Odd-lot Trading of Listed Securities), asked the Taiwan Securities Exchange (“TWSE”) to promote intraday odd-lot trading.  Such proposition was supported by the Taiwan Securities Association, and the TWSE obliged and targeted the second half of 2020 to launch the market.  Securities companies may decide whether or not to participate in the intraday odd-lot trading.  The planned intraday odd-lot trading will be conducted between 9:00 am and 1:30 pm.  The way of transactions will be matching odd-lots for aggregate auction every ten minutes.  The incomplete odd-lot offers will not be reserved for after-hour odd-lot trading.(Linda Huang)


Patent Linkage System Introduced By Pharmaceutical Affairs Act Came Into Effect On August 20, 2019


The Executive Yuan had announced that the Patent Linkage System, introduced into the Pharmaceutical Affairs Act last year, came into effect on August 20, 2019.  Patent owners may now record their patents on the Patent Linkage Recordation Website. (Roam Huang / Trainee Lawyer)



For further information, please contact:  


C. Y. Huang, Partner, Tsar & Tsai Law Firm