Types of companies that can be incorporated in Taiwan

Taiwan is an attractive investment destination, attracting international investors because of its stable business environment and preferential policies. With a variety of business forms, from limited companies, joint-stock companies to representative offices and branches, Taiwan offers investors a variety of flexible options to suit their business size and goals. Each type of business has its own characteristics, meeting the diverse needs of investors. Viet An Law would like to introduce to customers the types of companies that can be established in Taiwan through the article below.

Several types of companies that can be incorporated in Taiwan

Joint Stock Company

A joint stock company in Taiwan, like many other countries, is a popular form of corporate organization. In which, charter capital is divided into many equal parts called shares. Each share represents a portion of ownership in the company.

Highlights and Benefits

• Limited liability: Shareholders are only responsible for the amount of capital contributed, not personal assets for the company’s debts.
• Easy capital raising: The share split makes it easy for the company to raise capital from many investors, both domestic and international.
• High liquidity: The company’s shares can be traded freely on the stock market, making it easy for investors to recover their capital.
• Professional management: Joint stock companies usually have a professional management board that runs the company effectively.
• Prestige and image: Joint stock companies are often highly appreciated for their prestige and scale, facilitating cooperation with other partners.

Requirements for a joint stock company in Taiwan

• Number of Directors: Minimum 3 Directors.
• Legal entity: Considered an independent legal entity, with its own legal rights and obligations.
• Work permits: Work permits can be issued to executives and technical personnel.
• Investment capital: The minimum proposed foreign investment capital is NT$50,000 (this level may change from time to time and specific regulations).

Limited Liability Company

In Taiwan, the formation of a Limited Liability Company is equivalent to the establishment of a Limited Liability Company (LLC). The main difference is that a Limited Company requires only one Director instead of three Directors and no Supervisor is required.

Advantages of a Limited Company in Taiwan

• Simple incorporation procedures: The requirements for the number of members and management structure are simpler than that of a Joint Stock Company.
• Flexible: Suitable for many different types of businesses, from manufacturing, trading to services.
• Low Establishment Cost: Due to the simple process and charter capital requirements, it is usually lower than that of a Joint Stock Company.
• Limited Liability: Like a Joint Stock Company, the liability of the members is limited to the amount of capital contributed.

Cons of a Limited Company in Taiwan

• Limited ability to raise capital: Compared to Joint Stock Companies, Limited Liability Companies are difficult to raise capital from many investors.
• Low liquidity: The shares of a limited liability company are usually not traded on the stock market, making it more difficult to transfer shares.
• Limited development scale: Limited liability companies are often suitable for small and medium-sized enterprises, which are difficult to expand on a large scale such as Joint Stock Companies.

Branch

The branch is an extension of a parent company headquartered overseas, located in Taiwan. A branch is not an independent legal entity, but is part of the parent company. All branch operations are operated and managed by the parent company.

Advantages of Setting Up a Branch in Taiwan

• Lower costs: The cost of setting up and operating a branch is usually lower than setting up a new company.
• Centralized management: The parent company can easily manage and control the operations of the branch.
• Unified Branding: Affiliates help maintain a unified brand image across the globe.

Disadvantages of Setting Up a Branch in Taiwan

• Unlimited Liability: The parent company is solely responsible for all legal obligations of the branch.
• Limited capital mobilization capacity: The branch is not able to raise capital independently.
• Low flexibility: The branch must comply with the regulations of both the host country and abroad.

Conditions for establishing a branch in Taiwan

• Parent company’s business license: The parent company must have a legal business license in its country.
• Branch registration: The parent company must carry out the procedures for registering a branch at the competent authority in Taiwan.
• Charter capital: In some cases, a minimum amount of charter capital may be required.
• Work permit: If the branch intends to recruit foreign workers, it is necessary to apply for a work permit.

Representative Office

A representative office is a form of a company’s presence in another country, often used to survey the market, find partners, and build business relationships before deciding to invest directly.

Why choose a representative office?

• Low cost: Setting up a representative office is typically less expensive than setting up a subsidiary.
• Flexible: Easily scale up or down operations according to needs.
• Risk Mitigation: Helps businesses assess the potential of new markets before making major investments.

Scope of operation of representative offices

Although it is not allowed to be directly involved in business activities such as production, business, or investment, a representative office may perform the following activities:

• Market survey: Research the tastes and behaviors of consumers and competitors.
• Partner Search: Connect with suppliers, distributors, agents.
• Brand promotion: Build brand image, introduce products and services.
• Collect information: Update information about the market, policies, and laws.

Taiwan supports the procedure for converting a representative office into a subsidiary

Converting from a representative office to a subsidiary is an important step when businesses want to expand their business in Taiwan. This process will help businesses gain more authority, more flexibility in business activities, and open up more opportunities for cooperation and investment.

Why switch?

• Enhanced legal status: The subsidiary has an independent legal entity, which enhances its credibility and credibility.
• Expand the scope of activities: It is possible to participate in more business activities, such as production, business, investment.
• Easy to raise capital: Shares can be issued to raise capital from investors.
• Increased control: Have the power to make independent decisions in business activities.

What type of company should investors choose to establish in Taiwan?

Choosing the right type of company when investing in Taiwan is an important decision, directly affecting the rights, obligations and development ability of the business. Here are some common types of companies and factors to consider when choosing:

Popular Company Types in Taiwan

• Limited Liability Company (LLC): This is the most popular type of company in Taiwan, chosen by many foreign investors. The advantages of this type are simple incorporation procedures, flexible charter capital, and limited liability of members.
• Joint Stock Company: This type is suitable for large-scale businesses that need to raise capital from many investors. The company’s capital is divided into shares and can be traded on the stock market.
• Branch: An extension of the parent company overseas. The branch is not an independent legal entity, but is under the management of the parent company.
• Representative office: Has the function of introducing products and services, finding partners, is not allowed to do business directly.

Factors to consider when choosing

• Business size and goals: If the business size is small and medium-sized, a limited liability company is the right choice. If you need to raise large capital and plan to list on the stock market, a joint stock company is a better choice.
• Level of control: If you want to have complete control over the company, a limited company is the right choice. If you want to share control with other investors, a joint stock company is a better option.
• Legal liability: With a limited liability company, the liability of the members is limited to the amount of capital contributed. As for joint-stock companies, the responsibilities of shareholders depend on the type of shares they own.
• Taxes: Tax rates and tax incentives may vary depending on the type of company and line of business.
• Legal regulations: Each type of company has different legal regulations on the procedures for establishment, management, and dissolution.