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Seated on a Taiwan Subsidiary's Board? How a Missed CPA Audit Turns Into Per-Person Fines

5 min read

Fictional scene

A director's seat on a Taiwan subsidiary's board can feel remote from an office in Chicago or Dallas. Taiwan's Company Act still counts that director as a "responsible person". When a company skips a required CPA audit, the fine can be imposed person by person.

Every director is a "responsible person"

In a limited company or a company limited by shares, the responsible persons are the directors. Managers and supervisors count too, within the scope of their duties (Company Act Article 8(1) and (2)). Where they live makes no difference.

Article 20(5) then provides for a fine on each of them. Failing to submit the statements for approval, or approving them without a required audit, carries NT$10,000 to NT$50,000 per person. Evading, obstructing or refusing the authority's inspection, or missing a filing deadline, carries NT$20,000 to NT$100,000 per person. Refusing a general inspection of business and finances costs each NT$20,000 to NT$100,000, and NT$40,000 to NT$200,000 per repeated refusal (Article 21(2)). Refusing to hand over documents follows the same scale (Article 22(2)).

On a three-member board, that can mean several fines, though not automatically one for every name on the register. Responsibility is assessed person by person, and Article 7 of the Administrative Penalty Act bars a penalty for a violation that was neither intentional nor negligent.

A dormant subsidiary is not exempt

What if the subsidiary has stopped trading? A 2015 Taipei District Court judgment answers that. The company had paid-in capital of at least NT$30 million. The Ministry of Economic Affairs ordered it to file its 2012 year-end documents by a deadline, including a CPA's audit report, and it had none to file. Each of its three directors was fined NT$10,000. At trial, one director's courtroom assistant said the company had not operated since October 2004 or hired a CPA since.

The court held that from incorporation until liquidation is complete, keeping books, closing the accounts, preparing statements and, where required, having them audited before approval are duties of the responsible persons. Having no business does not lift them.

Ignorance of the rule did not help either. Article 8 of the Administrative Penalty Act says not knowing the law is no excuse, though a penalty may be reduced or waived depending on the circumstances. The court found nothing to justify that: the company had total capital of NT$200 million and had been audited in earlier years, and the Ministry had imposed the statutory minimum. It was a first-instance judgment, appealable within 20 days of service (104 Jian No. 101).

When the audit is required, and how the Ministry asks

A Ministry announcement of November 8, 2018 (經商字第10702425340號) requires a CPA audit when paid-in capital at the end of the reporting period is NT$30 million or more. Below that, a company is still covered if net operating revenue reaches NT$100 million or it has 100 or more employees enrolled in labor insurance. The rule applies from fiscal 2019; public companies follow the securities regulator where it has its own rules (Executive Yuan Gazette). A capital increase counts if it is in place at year-end.

Article 20(4) lets the authority inspect year-end documents at any time or order them filed by a deadline. The procedure is in the Ministry's Regulations Governing Filing and Auditing of the Annual Accounting Final Reports and Statements of the Company. Approved business reports, financial statements and profit-distribution or loss-offset proposals are kept at the head office (Articles 2 and 3), and a CPA or lawyer may make the filing. CPAs who audit companies covered by Article 20(2) file a list of that year's engagements within the deadline the authority sets (Article 4(2)). The authority may demand supporting records and explanations (Article 9), review the CPA's working papers (Article 10), and, where it finds a breach, must deal with it under the law without delay; it may also give the company a deadline to respond (Article 11).

The Business Entity Accounting Act runs its own clock

Separate fines under the Business Entity Accounting Act are larger. Year-end closing must be finished within two months after the fiscal year ends, extendable by two and a half months when necessary (Article 65). Missing that exposes the representative, managers and accounting staff to NT$60,000 to NT$300,000 (Article 76, item 4). Not submitting the statements for owner approval within six months is NT$10,000 to NT$50,000 (Article 79, item 5, with Article 68(1)).

Challenging a fine starts with delivery

An administrative appeal (訴願) must be filed within 30 days from the day after the decision is delivered (Administrative Appeal Act Article 14). For directors living abroad, where the decision lands matters. In a 2021 case, two registered directors fined NT$10,000 each over unaudited 2016 statements said they had been put on the board in name only. The Taipei District Court found the decisions had been sent to household-registration addresses where they did not live, so service was invalid and the appeal clock never started; it set aside the ruling that had refused their appeal as late. It did not decide whether the fines were right (110 Jian Geng Yi No. 7). Today, court challenges to fines of NT$500,000 or less begin in the local administrative litigation division of a high administrative court (Administrative Litigation Act Articles 3-1 and 229).

Approval, and the first audit after a gap

Once the shareholders' meeting approves the year-end documents, the company is deemed to have released the directors and supervisors from their liability to it, except for unlawful acts (Article 231). Where an audit is required, it has to come before that approval. The auditor is appointed, dismissed and paid by board resolution in a company limited by shares (a majority of directors present, and a majority of those present in favor), or by a majority of all shareholders' votes in a limited company, unless the articles set a higher threshold (Article 20(3), applying Article 29(1)).

Restarting audits after years without one raises opening balances. Article 7 of the Ministry's Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountant (會計師查核簽證財務報表規則) requires the necessary procedures on opening balances under auditing standard No. 510 in a first engagement. Last year's books come into view.

The 2015 company had gone without an audit since 2004; its three directors were each fined the statutory minimum of NT$10,000.

Branches of foreign companies are covered as well: Company Act Article 377 applies Article 20(1) to (4) to them. Thresholds and the CPA-certified tax return are covered in CPA Audits, CPA-Certified Tax Returns and Bookkeeping Rules for Taiwan Subsidiaries and Branches. For board and shareholder procedures or challenging a fine, Hovering International Law Firm can be reached at wei@hoveringlaw.com.tw; its Taichung office is at 6F-1, No. 19, Guanqian Rd., North Dist., Taichung City 40453 (40453 臺中市北區館前路19號6樓之1).

Official sources

Checked October 21, 2026.

Frequently Asked Questions

Who is fined if a Taiwan company that needs a CPA audit approves its statements without one?
Company Act Article 20(5) fines the company's responsible persons, each of them, NT$10,000 to NT$50,000. In a limited company or a company limited by shares the responsible persons are the directors, and managers and supervisors also count within the scope of their duties (Article 8). Each person's own responsibility, including intent or negligence, is assessed (Administrative Penalty Act Article 7). In a 2015 Taipei District Court case, three directors were each fined NT$10,000 and the court upheld the fines.
Our Taiwan subsidiary has been dormant for years. Does it still need an audit?
The Taipei District Court held in 2015 (104 Jian No. 101) that from incorporation until liquidation is complete, a company must keep books, close its accounts and prepare financial statements, and if it meets the thresholds, have them audited before approval; having no business does not excuse it. That was a first-instance judgment and could be appealed. Whether the audit is required depends on paid-in capital, net operating revenue and the number of employees in labor insurance at the end of the reporting period.
What happens if the Ministry of Economic Affairs asks for our year-end documents?
Under Article 3 of the Regulations Governing Filing and Auditing of the Annual Accounting Final Reports and Statements of the Company (公司決算書表申報暨查核辦法), the company keeps its approved year-end documents at its head office, and the authority may inspect them at any time or order them filed by a deadline. A CPA or lawyer may file for the company. Evading, obstructing or refusing inspection, or failing to file on time, can mean a fine of NT$20,000 to NT$100,000 for each responsible person (Company Act Article 20(5)).

This article provides general information and is not legal advice on any individual matter.

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