"Fat Cat" Provisions to be Approved in Taiwan's Company Law

Taiwan legislature approved so-called “fat cat” provisions in the wake of corporations seeking financial assistance from the government. The proposed amendments to the Company Law will stipulate that if a corporation receives financial assistance from the government the CEO as well as board directors will agree to forfeit their remuneration during the term the financial assistance is continuing, and if the assistance is in an amount of over 1 billion NT dollars, the CEO may be required to appear in the legislature to report and answer questions in connection with the plan to revive the business. In addition, compensation for managers and officers may be limited and there may be imposed a requirement to restrict the number of layoffs. Certain company law restrictions such as shareholders preemptive rights will be trumped if the government will be issued new shares as consideration for providing the financial assistance.