Why it is important that the Taiwan branch manager of a Foreign Company must conduct and complete the liquidation when the Foreigh Company intends to close the operation in Taiwan?
Article 378 of Company Act provides that "A foreign company which establishes its branch office in the territory of the Republic of China (Taiwan) and which desires to cease conducting business therein, shall apply to the competent authority for nullifying the registration of the branch office; however it may not be exempted from any obligation and debt incurred by it prior to the filing of such application."
After the branch applies for annulment of registration, it must go through the liquidation procedure. When conducting liquidation, unless otherwise designated by the foreign company, the person in charge or branch manager in Taiwan shall be the liquidator (Article 380 of the Company Law).
During liquidation, the Taiwan branch should apply the liquidation procedures of various companies in my country's company law to settle the creditor's rights and debts, and the debts that cannot be settled in the end should still be paid off by the foreign company (Article 380 of the Company Law).
Once the Taiwan branch enters the liquidation process, the person in charge of the company, the branch manager and the designated liquidator (hereinafter referred to as "the person in charge in liquidation") will play an important role. During the liquidation period, the liquidator shall not arbitrarily dispose of the company's assets or move the company's assets abroad (Article 381 of the Company Law).
According to Article 382 of the Company Law: "The responsible person, branch manager or designated liquidator of a foreign company within the territory of the Republic of China shall violate the previous regulations.
Under the provisions of Article 2, the foreign company shall be jointly and severally liable with the foreign company for the debts incurred by the foreign company operating within the territory of the Republic of China or by the branch company. "According to this provision, if the person in charge in the liquidation of the company disposes of the assets of the branch inappropriately in the liquidation procedure, which affects the solvency of the company, the person in charge in the liquidation must be jointly and severally liable with the foreign company for repayment.
However, it is more doubtful that if the Taiwan branch cannot repay the debt, the foreign company should be responsible for repayment. If the foreign company is also unable to repay or is unwilling to come forward to deal with it, whether the person in charge of the liquidation must be jointly and severally Liability? Judging from the text of the law, Article 382 of the Company Law only stipulates that when the person in charge of the liquidation "violates the provisions of the preceding two articles", he shall be jointly and severally liable with the foreign company for the debts incurred by the branch office in Taiwan. Does this include "foreign company"? Insolvency" also counts as a breach of duty by the person in charge during liquidation? If it is affirmed, the legal basis for this provision is really weak, since the company is a legal person, and so is a foreign company. Even if it is a shareholder or actual owner of the company, it is only responsible for the company's shares and capital contribution. Not to mention that the person in charge of the branch, the manager, or the person appointed as the liquidator with special tasks, is jointly and severally liable for the debts of the branch. Moreover, there are many cases where Taiwan companies are unable to pay off their debts and enter into dissolution and liquidation. If it is said that when a Taiwan company is unable to pay off its debts, the person in charge, manager, or liquidator must be jointly and severally liable for the liquidation with their personal resources. Are there such strict regulations on the person in charge in the liquidation of a foreign company?
In practice, there are cases in which the creditors of the Taiwan branch use this provision to appeal to the court for joint responsibility of the person in charge in the liquidation process. Due to the different facts of the case, it cannot be generalized. Remind the person in charge of the foreign company in Taiwan and the branch manager or the person appointed as the liquidator not to think that he is just a name and ignore the risk of taking this special position.
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