A Taiwan supervisor's stop notice reaches US head office

A notice from a Taiwan subsidiary's “supervisor” may look like an internal escalation to a US head-office team. The title needs care. In a Taiwan company limited by shares that has statutory supervisors, a 監察人 is a statutory oversight officer, distinct from a line manager. A notice seeking to stop a transaction can therefore be an act required by Taiwan's Company Act.

For the executive who receives it, the immediate question is what conduct the notice identifies and whom it addresses. Copying the parent on a warning and notifying the Taiwan board to stop an unlawful act are different steps. The record may also show whether the parent was advising the subsidiary or actually directing its directors.

Why a supervisor can intervene in a transaction

Article 218-2 requires a supervisor immediately to notify the board or a director to stop business conduct that violates law, the articles of incorporation or a shareholders' resolution. The notice identifies the legal, charter or shareholder requirement that the transaction violates, along with the conduct to be stopped.

Supervisors have tools for examining the underlying transaction. Under Article 218, they must supervise business operations and may investigate the company's business and finances, inspect or copy records, and require reports from the board or managers, with the option of retaining a lawyer or certified public accountant on the company's behalf to examine the matter.

Who received the notice? What act did it identify? Those details help establish whether the duty was performed, together with the delivery record and the material on which the supervisor acted. Reporting only to US head office does not necessarily satisfy a duty whose specified recipient is the Taiwan board or director.

The director who objected has a different record

Before the supervisor intervened, a board member may have objected to the transaction. That objection matters under Article 193, which requires the board to conduct business in accordance with law, the articles and shareholders' resolutions. If a resolution breaches those requirements and causes company loss, participating directors are liable to the company.

There is an exception for a director who expressed an objection that can be proved by a record or written statement. Minutes are not the only evidence. For a US team reviewing the notice, an earlier objection may be in a separate statement sent to the Taiwan board. Its date and reference to a particular resolution connect it to the decision now being challenged.

Silent participation is different. A participating director needs evidence of an expressed objection to rely on the exception. Article 193 addresses liability for the resolution; separate unlawful acts in carrying it out require their own assessment. The earlier board record and the later supervisor notice therefore describe different acts, often on different dates.

Following the instruction back to head office

An organization chart may show that a US executive holds no directorship in Taiwan. Article 8(3) nevertheless reaches a non-director who substantively performs a director's functions, or substantively controls the company's personnel, finances or operations and substantively directs its directors in conducting business.

The correspondence may show the local board weighing advice, or a head-office executive fixing the transaction terms and directing their implementation. The full sequence, together with personnel and financial authority, is evidence for deciding whether the statutory control and direction conditions are met.

Qualifying non-directors bear the same civil, criminal and administrative-penalty responsibilities as directors. Each kind of liability retains its own requirements, including the elements of any alleged offense. The statutory exception concerns government directions to government-appointed directors for public interests; ordinary foreign-parent directions remain subject to the two routes described above.

This also leaves the registered director's duties intact. Under Article 23(1), responsible persons owe loyalty and the care of a good administrator, and a breach causing company loss creates liability for that loss. Directors are responsible persons under Article 8; supervisors are included within the scope of their duties. The local director's assessment of the subsidiary's interests remains relevant alongside the parent's approval.

When more than one person faces a claim

The supervisor's omission requires its own analysis. Under Article 224, a supervisor who breaches law or the articles, or neglects duties, causing company loss must compensate it. Where a supervisor and director both bear liability to the company or a third party, Article 226 makes them joint debtors.

Claims from outside the company engage Article 23(2): unlawful conduct in carrying out company business that causes another person's loss can make the responsible person jointly liable with the company. That claim turns on the unlawful conduct and the loss it caused the claimant, rather than the transaction's financial result alone.

For a US team trying to understand a Taiwan notice, the useful starting material is therefore the notice itself, the local board papers and the instructions surrounding the transaction. Hovering International Law Firm can be reached at wei@hoveringlaw.com.tw. Reading those documents together allows the supervisor's response, the director's decision and the parent's involvement to be examined on their own evidence.

Official sources

• Company Act, Article 8 and Article 23: responsible persons and liability.
• Company Act, Article 193: board resolutions and provable dissent.
• Company Act, Article 218, Article 218-2, Article 224 and Article 226: supervisors' powers, notices and liability.

Checked: October 21, 2026