Newsletter
MOEA RULINGS ON EMPLOYEE STOCK WARRANT NUMBERS
The number of stock warrants that a company makes available to employees is not one of the matters required to be stated in a company's Ar-ticles of Incorporation under Article 129 of the Company Law, nor is it one of the matters that cannot take effect unless stated in the Articles of Incorporation, under Article 130 of the Law. In practice, a company that is not a public issuing company can, within the limits of its authorized capital, flexibly adjust the number of stock war-rants it makes available to employees according to practical needs.
However, if a non-public-issuing company does nonetheless specify in its Articles of Incorpora-tion the number of stock warrants available to employees, the board of directors cannot vary that number of its own accord, because Article 193 of the Company Law provides that the board must conduct business in accordance with laws and ordinances, the company's Articles of In-corporation, and resolutions of the shareholders' meeting. Therefore, according to an interpreta-tion issued on 21 February 2003 by the Ministry of Economic Affairs, when a company proposes to issue new shares, if there is a risk of violating the restrictions on capital increases contained in Article 278 of the Company Law, it should first amend Articles of Incorporation to increase its authorized capital or to adjust the number of employee stock warrants.
In a further interpretation issued on 3 March 2003, the MOEA stated that it is in order for a non-public-issuing company to amend its Arti-cles of Incorporation to increase its authorized capital, and retain the entire amount of the in-crease for issuing employee stock warrants.