Corporate Charters of Companies Limited by Shares and the Proposal for Model Charters

Though known as company’s constitution, corporate charter has not played an active role in current business practice. This is a rather unique phenomena in Taiwan if observing from a comparative law perspective. The thesis thus aimed at sorting out the possible causes of such phenomena by comparing the regulations, the administrative and business practice in Taiwan with different legal regimes including the United Kingdom, Hong Kong, and Singapore. All of them are well known for their good practice in corporate governance, and their company law have been explicitly providing model corporate charter (or model articles of association, model constitution) for companies for a long time. This thesis draws the conclusion that the possible causes to the negligence of corporate charter are: For one, the statutory law does not clearly define the function and effect of corporate charter, and related regulations scattered across various statutory law including the Companies Act and Securities Exchange Act in Taiwan. Secondly, the company registrar interpret the law in a rather conservative way, restricting the contractual freedom of corporate charter in practice. Thirdly, § 12 of the Companies Act overly address the external effect of corporate charter once it is registered, making companies reluctant to construct a well-tailored corporate charter. The building of model corporate charter might help to mitigate the problem and draw more attention to the positive function of corporate charter in building a good governance structure for a company. Therefore, focusing on Companies Limited by Shares, this thesis analyzed various corporate charters in the U.K. and Taiwan, hoping to sort out the needs of private and public companies in building their corporate charter. Also, this thesis give suggestions on how model corporate charters for companies in Taiwan may be designed, and ways to implement such design.