The Company Law will be completely revised before the end of the year;As to the issue that the parent company as well as its subsidiary holds the stocks of each other, the votes owed by the subsidiary are limited.

To avoid the issue that the enterprise whose parent company as well as its subsidiary holds the stocks of each other makes use of the stockholder votes owned by the subsidiary, the Ministry of Economic Affairs schedules to revise the Company Law before the end of year. In the revision, the current article regarding that the subsidiary owned 1/3 votes is cancelled; besides, the subsidiary who holds the stocks of the parent company shall not exercise its votes in the stockholders meeting. It is predicted that this new revision will affect a hundred thousand enterprises or so.

As known, the enterprises in this country usually win over the seats of board members by way of the parent company and the subsidiary holding the stocks of each other for controlling the board, beautifying the financial report or fixing the balance sheet so that they could take away the properties of the company step by step. In order to completely avoid the aforesaid problem, in the revision of the Company Law made in 2001, the Ministry of Economic Affairs not only restrains the subsidiary to buy back the stocks of its parent company but also limits the votes owned by the subsidiary to be 1/3 votes. To prevent from resulting in any impact on the stock market, the said revision made in 2001 did not trace back but gave the enterprise enough time to adjust its stockholding step by step. (2004.03)

CYJ/WYL