Types of Companies in Taiwan

Our experts in company formation in Taiwan can help you choose between the main types of companies in Taiwan, based on your future business activities.

What are the main types of companies in Taiwan?

Depending on the size of the company that you intend to set up when starting the company formation procedure in Taiwan, the authorities have given investors the possibility to choose from several legal forms.

There are four main types of business structures that can be opened:

• limited liability company;
• company limited by shares;
• unlimited company;
• unlimited company with limited liability shareholders.

Taiwan also recognizes the close company, a special form of company limited by shares that offers greater flexibility in ownership and internal management.

What other business structures are available in Taiwan?

Foreign investors may also consider:

• branch – an extension of a foreign company that can conduct commercial activities in Taiwan;
• representative office – allows a foreign company to conduct liaison and other permitted non-revenue-generating activities without establishing a separate legal entity;
• sole proprietorship – a business owned by one individual;
• partnership – a business structure involving two or more partners.

What is a limited company in Taiwan?

A limited company is a popular choice for small and medium-sized businesses in Taiwan. It can have just one shareholder or several, and foreign investors can also set up this type of company.

Shareholders are generally only responsible for the amount they invest in the business, so their personal assets are protected if the company runs into debt.

A limited company must have between one and three directors, chosen from among its shareholders. There is no general minimum capital requirement, although some business activities have their own rules.

Foreign investors can own the entire company, as long as the chosen business activity is not subject to ownership restrictions.

A limited company is easier to manage than a company limited by share, making it a good option for entrepreneurs who do not need a more complex corporate structure.

What are the regulations for starting a company limited by shares in Taiwan?

Foreign investors can start a company limited by shares in Taiwan by filing a foreign investment application (FIA) with the Investment Commission, which will provide the approval for starting business activities in this country.

In order to open a company in Taiwan as a company limited by shares, investors have to respect the following shareholding requirement: the company can be incorporated by at least two shareholders who are natural persons or by one corporate shareholder.

The company requires three directors and a supervisor and one of the directors will also have the function of chairperson.

What is the difference between an unlimited company and an unlimited company with limited liability shareholders in Taiwan?

An unlimited company has at least two shareholders who are personally responsible for the company’s debts. If the business cannot pay what is owes, creditors may seek repayment from the shareholders’ personal assets.

An unlimited company with limited liability shareholders has two types of shareholders. Some have unlimited liability for company debts, while others are only liable up to the amount they have invested.

Both structures require at least two shareholders, but the second offers limited liability protection to some of its members.

What are the documents necessary for opening any type of company in Taiwan?

As a general rule, some of the basic aspects that should be done when starting the procedure of company formation in Taiwan are the following:

• prepare the company’s documents and notarize them with a public notary in Taiwan;
• register with the local authorities and obtain the required certificates;
• select a business address, which is necessary for all company types;
• select an appropriate and unique company name and select the business activities that will be carried out under the preferred company type;
• prepare the company’s seal and open a corporate bank account, in which the investors will deposit the required capital.

What are the characteristics of a partnership in Taiwan?

The partnership is a type of structure that can be registered by both locals and foreigners, but it is necessary for the company’s founders to be natural persons and this legal entity can’t be incorporated by other companies.

There are no capital requirements for this type of company in Taiwan, but its registration (in the case of foreigners) is bound by obtaining an approval for foreign investments, just like in the case of private company limited by shares.

The partnership in Taiwan has to be registered by at least two natural persons, who will be jointly liable for the debts of their business.

An advantage of this company type is that there are no restrictions with regards to the ownership of the company (when referring to the residency/nationality of the founders).

Can investors set up a representative office in Taiwan?

Yes, another way to access the Taiwanese market is by opening a representative office.

The representative office is simply a means to having a business presence on the local market and not a way to develop a commercial activity. In other words, investors are not allowed to sell products or services through the representative office.

Instead, the representative office can be used as a way to establish business contracts in Taiwan, and keeping a close connection with the company’s clients and business partners.

For instance, this can be the ideal vehicle prior to engaging in actual business activities here and it is highly recommended prior to starting the process of Taiwan company formation.

What are the characteristics of a branch in Taiwan?

The branch office may also need to apply for special permits, but this depends on the scope of the business.

The registration for taxation purposes is mandatory in the case of a branch office, as it will carry out taxable activities. The registration of a branch office does not imply the need to deposit a minimum share capital.

How to determine what is the most suitable legal structure in Taiwan?

It is sometimes difficult for foreign investors to decide on what is the best solution in terms of the legal structure in a place like Taiwan, which has particular legal requirements in terms of the initial capital, or taxation rules.

This is why you need to determine what your priorities, objectives and financial means are before choosing the legal structure.

You should also consider how many shareholders the company will have, who will manage the business and whether you plan to bring in additional investors later.

Some business activities may require special licenses or additional approvals, so it is worth checking these requirements before starting the registration process.

Our company formation specialists in Taiwan can help you compare the available structures and understand the legal requirements for setting up your business.

Contact us if you need assistance with any of the available types of companies in Taiwan!