Newsletter
UNILATERAL TERMINATION OF CONTRACT BY DIRECTOR DOES NOT REQUIRE SUPERVISOR TO REPRESENT COMPANY
In a 2007 civil appeal judgment, the Taiwan High Court held that the provision of the Company Act requiring that when a company director, on his own or another's account, conducts a transaction with the company, the company should be represented by a supervisor, refers to a legal transaction between the director and the company that is commercial in nature and involve a conflict of interests.
This provision is intended to assure the fairness of transactions between directors and the company by preventing the company's interests being sacrificed for personal advantage due to friendship between directors, and to forbid the same person from acting as the agent or representative of both sides. For these reasons, the Act provides that under such circumstances a supervisor of the company should act as the company's representative in dealings with the director concerned. But the Act does not require that all actions transacted between a director and the company are lawful only if the company is rep-resented by a supervisor.
The resignation of a company chairperson is a unilateral action by which the contract of appointment is terminated, and does not require the company's consent. It differs in nature from actions creating bi-lateral obligations, such as purchase, sale, or loan transactions. Accordingly, the provision requiring the company to be represented by a supervisor does not apply.