Singapore, April 21, 2025 – In an unprecedented move, Taiwan’s Commercial Court has issued a provisional injunction prohibiting the convening of the upcoming shareholders’ annual meeting of Sinotactful (TWSE: 5481), marking the first such case involving a publicly listed company in Taiwan. The decision has sent shockwaves through Taiwan’s corporate sector and drawn concern from investment circles in Singapore and across the region about judicial intervention in corporate governance.
This court order, a provisional status injunction, is not directed at an extraordinary general meeting but instead freezes a regularly scheduled annual general meeting (AGM) mandated by law for the re-election of directors—making it a legal first in Taiwan. Public records reveal that the injunction was filed by shareholders aligned with the market faction. Despite Sinotactful having a net asset value of approximately NT$2 billion (about SGD 80 million), the court approved the injunction with relatively low security bonds of NT$1.65 million and NT$2 million (about SGD 150,000 in total). This has effectively paralyzed a board whose term has already expired, delayed financial reporting, and forced the company to reorganize multiple meetings—causing tangible harm to its operations and investors at large.
The Core Issue: Balancing Public Interest and Proportionality
A company advisor for Sinotactful commented, “Although the court had issued its ruling earlier, it wasn’t delivered to the company until a week before the AGM, giving the company almost no time to notify shareholders, and catching the market off guard. Given that the legal proceedings are expected to take at least 1–2 years to reach a final decision, director elections could be delayed for a prolonged period, potentially disrupting market order and harming all shareholders. Even if the final judgment allows the company to proceed with board elections, damage from the old board’s decisions—or inaction—during this interim could be irreversible.”
Sinotactful has filed an appeal against the ruling and has tasked its audit committee with calling an extraordinary shareholders’ meeting in accordance with Taiwan’s Company Act and Securities and Exchange Act, in an effort to maintain basic corporate governance operations.
Corporate governance observers in Singapore believe the case exposes structural risks in how the Asia-Pacific region balances judicial intervention with corporate governance. One anonymous asset manager in Singapore remarked, “We support protecting shareholder rights, but if courts can intervene with such a low threshold—impacting board composition and corporate operations—it may erode institutional investors’ confidence in the long-term stability of the market.”
Scholars have also raised concerns that Taiwan’s Commercial Court system may lack the institutional design to appropriately balance competing interests in shareholder disputes.
Taiwan’s Commercial Court currently operates under a two-level, two-instance system, but with only one Commercial Court staffed by three judges. Once a decision is made, the only path to appeal is through the Supreme Court on the basis of legal errors. However, the Supreme Court rarely makes direct rulings and instead tends to remand cases back to the same Commercial Court for reconsideration. This often means the original three judges may review their own decision, with no external oversight. If such rulings affect the rights of thousands of shareholders and market confidence, having them determined by a small panel with limited checks could trigger regional contagion risks.
Given Taiwan’s pivotal role in the global semiconductor and high-tech supply chain, whether this incident will affect foreign investors’ trust in its financial governance remains to be seen. One thing, however, is certain—what may appear to be an internal corporate dispute has already prompted regional investors to reflect: When the court steps into the boardroom, who safeguards the stability of the market?