Chapter 3 Government-Endowed Foundation
A government-endowed foundation shall have a Board. The Board shall consist of 7 to 15 directors provided there shall always be an odd-number of directors; one of them shall serve as the chairperson and another may serve as the vice-chairperson, if needed. Upon approval by the competent authority, there may be more than 15 directors and more than 1 vice chairperson.
A government-endowed foundation shall have one half or more of its directors selected by the competent authority from the following persons:
(1) Officers of central or local government agencies in charge of the relevant business;
(2) Foreign or domestic experts or scholars specialized in research of the endowment purpose;
(3) Persons considered fair and just by the society; and
(4) Persons recommended by the government agencies, public legal persons, government-owned enterprises or foundations that make endowments or donations under the second paragraph of Article 2.
Directors of a government-endowed foundation who are appointed through any of the following methods under the charter of endowment shall be counted in the number of directors selected by the competent authority under the preceding paragraph:
(1) Selected and appointed by the superior government agency of the competent authority;
(2) Served by persons holding specific official posts in the government agencies; and
(3) Persons who are selected, designated or agreed by the competent authority or its superior authority and appointed by the Board.
Any representative selected, designated or agreed by the government agencies under the preceding two paragraphs may be replaced with another person selected or designated by the government agencies who shall serve the remaining term of office of the predecessor.
The selection, designation or agreement of any director or representative or any replacement thereof in accordance with the preceding three paragraphs shall become effective upon the arrival of the selection, designation or agreement notice to the government-endowed foundation in accordance with the content of such notice.
Directors of a government-endowed foundation shall serve a term of up to 4 years, and may be re-appointed upon expiry of the term. The number of re-appointed directors shall not exceed two-thirds of the total number of directors to be appointed at the same time. The limitation hereunder may not apply to a national foundation or a local foundation, subject to the approval by the competent Yuan or the competent authority respectively.
The directors served concurrently by public servants whose office changes following the change of their official posts shall not be counted in the number of directors to be re-appointed or the total numbers to be selected and appointed.
The number of times that a director may be re-appointed shall follow the regulation stipulated by the competent authority, if any.
A director removed from office prior to expiry of such director’s tenure due to resignation, death or inability to exercise duties for any causes may be replaced with another who shall serve the remaining term of the predecessor.
A government-endowed foundation shall have 2 to 5 supervisors who shall select one among themselves to act as the managing supervisor. The number of supervisors may be more than 5 upon approval by the competent authority.
At least one of the supervisors under the preceding paragraph shall be selected by the competent authority.
A supervisor of a government-endowed foundation shall serve a term of up to 4 years and may by be re-appointed upon expiry of the term.
The number of times that a supervisor may be re-appointed under the preceding paragraph shall follow the regulation stipulated by the competent authority, if any.
The managing supervisor shall attend the Board meeting in a non-voting capacity. The competent authority may remove the managing supervisor from office and take such other necessary measure if the managing supervisor’ failure to attend the Board meeting is likely to endanger the benefit of the public or the government-endowed foundation.
The third to fifth paragraphs and the ninth paragraph of the preceding Article shall apply mutatis mutandis to the supervisor of a government-endowed foundation.
When the competent authority selects the directors or supervisors in accordance with the preceding two Articles for a government-endowed foundation the fund of which is, in whole or in part, endowed or donated by public legal persons established under law, a certain percentage of its directors or supervisors shall be selected from the representatives recommended by the endowing or donating public legal persons.
The percentage and the procedure for recommendation under the preceding paragraph shall be stipulated by the competent authority.
A director or supervisor of a government-endowed foundation with any of the following circumstances shall be removed from office by the competent authority with notice to the court for relevant registration:
(1) Having been sentenced with an imprisonment term provided that this shall not apply if the sentence is accompanied with a probation or the offence is committed due to negligence;
(2) Exercising duties by an executive director or supervisor in violation of law or the charter of endowment which is harmful to the benefit of the public or the foundation; or
(3) Failing to follow government policies and thus violates the purpose of selection or designation hereof if the director or supervisor is selected by the government agencies pursuant to law or subparagraph (2) or (3) of the third paragraph of Article 48.
No person with any of the following circumstances shall serve as a director or supervisor of a government-endowed foundation or, if appointed, shall be ipso facto removed from office by the competent authority with notice to the court for relevant registration:
(1) Having been adjudicated bankrupt or ordered to begin liquidation procedure by the court in accordance with the Consumer Debt Clearance Act and the right and privilege has not been reinstated; or
(2) Having been placed under guardianship or assistance by the court and the status is not yet cancelled.
The directors and supervisors of a government-endowed foundation are non-paid positions. This shall not apply to the chairperson who works full-time without receiving any other salary, monthly pension, monthly retirement pay or other pay with equivalent nature.
The part-time pay of directors and supervisors as well as the salary payment standard of the chairperson and other personnel of a government-endowed foundation shall be resolved by the Board and submitted to the competent authority for approval. The same shall apply in case of a change of the payment standards.
In reviewing the stipulation or change of the salary payment standard under the preceding paragraph, the competent authority shall take into account the factors such as the nature and scale of the foundation, professionality of personnel, the weight of responsibilities, the salary level in the private sector, and the supply and demand of professionals in the market.
Unless the law provides otherwise, no director or supervisor of a government-endowed foundation nor the spouses of or relatives within the second degree to the said persons shall engage with the foundation in purchase and sale, lease, contracting or any other transaction that may gain profits for their own or their related parties. This shall not apply to transactions where the object to be transacted are offered by the foundation at official prices.
A person in violation of the preceding paragraph shall be liable for the damages incurred by the foundation as a result thereof.
A government-endowed foundation shall have same fiscal year as that of the government. The preparation and review of budget and final accounts shall follow the Budget Act, the Financial Statement Act and relevant law in addition to the following:
(1) Prior to the beginning of a fiscal year, a work plan and a budget shall be prepared and passed by the Board and submitted to the competent authority; and
(2) Following the end of a fiscal year, the work result and final accounts shall be reviewed by the Board and audited by the supervisors, and then submitted to the competent authority.
The competent authority may regularly inspect a government-endowed foundation’s operation, financial status and investment status in writing or by other method, and may conduct on-site inspection as it deems necessary. In conducting an inspection, the competent authority may order the presentation of evidencing documents, books and relevant information, and the government-endowed foundation shall provide relevant materials in a cooperative manner and shall not avoid, impede or refuse to abide the inspection.
A person who avoids, impedes or refuses to be inspected or provide information in violation of the preceding paragraph shall be subject to a fine of not less than NT$30,000 and not more than NT$150,000 and may be fined at each failure to comply therewith.
A government-endowed foundation’s budget, final accounts and regular inspection under the first paragraph shall be published by the competent authority on website.
The competent authority may, depending on the nature of the event, remove, in whole or in part, the directors or the chairperson of a government-endowed foundation from office if any of the following circumstances occurs which affects the foundation’s normal operation:
(1) The Board meeting is not duly convened or unable to pass any resolution;
(2) Any dispute arises out among directors themselves or with the chairperson;
(3) The Board, any director or the chairperson violates this Act or any regulation promulgated hereunder; or
(4) The foundation fails to make any correction within the specified time period after it is ordered to do so by the competent authority or the measure taken is not effective.
Upon removal of all directors from office in accordance with the preceding paragraph, the competent authority shall select 3 to 7 interim directors from among the original directors or persons considered fair and justice by the society to act on behalf of the Board and reorganize the Board in accordance with Article 48, and one shall be elected among themselves as the chairperson. The acting period shall not exceed 1 year and may be extended once for up to 1 year.
Upon removal of a part of directors from office in accordance with the first paragraph, new directors shall be selected and appointed to take office for the remaining term of the predecessors.
The competent authority shall notify the court for relevant registration when either of the circumstances under the preceding three paragraphs occurs.
A director or the chairperson removed from office in accordance with subparagraph (3) of the first paragraph, shall not be selected as the interim director under the second paragraph or the director of that foundation.
The competent authority may order a government-endowed foundation to dissolve if any of the following circumstances occurs to the foundation:
(1) The continuance is no longer necessary because the establishment purpose has been attained, or it is unable or ineffective to attain the establishment purpose;
(2) The continuance is no longer necessary due to change of circumstances; or
(3) The period for which it is established, if any, is expired.
If a government-endowed foundation receives a private donation and plans to include such donation in its fund and, as a result hereof, the private endowments or donations included in the fund shall reach 50 percent of the total fund , such inclusion requires to be passed by a majority of the attending directors in a Board meeting attended by the three-fourths of all directors and applied to the competent authority for approval; without approval, no such donation shall be included in the fund.
Upon approval of the application under the preceding paragraph, the competent authority shall order the foundation to acquire the privately donated property, complete the court registration, and appoint director and supervisor in accordance with relevant provisions applicable to public-endowed foundations within a specified time period; provided that the term of the directors and supervisors so appointed shall serve the remaining term of office of the predecessor. All original directors and supervisors shall be ipso facto removed from office upon the appointment of new directors and supervisors.
After a government-endowed foundation is converted into a public-endowed foundation, the percentage of the directors and supervisors selected, designated or agreed by government agencies shall be equivalent to the ratio of endowment and donation from government agencies, public legal persons, government-owned enterprises and government-endowed foundations to the foundation’s total fund (rounded to the nearest whole number) provided that the number shall not be less than one for each.
If the foundation, upon expiry of the specified time period under the second paragraph, has not yet acquired the privately donated property and completed the court registration, or completed the appointment of directors and supervisors under the preceding two paragraphs, the competent authority may rescind its approval ab initio.
If a public-endowed foundation receives donations from government agencies, public legal persons, government-owned enterprises or government-endowed foundations and, as a result hereof, such endowment or donation included in its fund reaches 50 percent of the total fund, such foundation shall, within 10 days, submit the updated property list and relevant supporting documents to the competent authority. The competent authority shall order the foundation to complete registration with the court and select or appoint directors and supervisors in accordance with relevant provisions applicable to government-endowed foundations and such director and supervisor shall serve the remaining term of office of predecessors. All original directors and supervisors shall be ipso facto removed from office upon the selection or appointment of new directors and supervisors.
If any of the following circumstances occurs to a foundation, the foundation shall be subject to a fine of not less than NT$30,000 and not more than NT$150,0000 and ordered to make a correction within a specified time period; failing which, the foundation may be fined at each failure to comply therewith:
(1) Violation of the preceding paragraph by failing to register with the court within the specified time period; or
(2) Failure to complete appointment of directors and supervisors in accordance with provisions applicable to government-endowed foundations within the specified time period under the preceding paragraph.
No approval shall be granted to national foundations by the competent authority in accordance with the first paragraph from the voting date of the presidential election through the date of office assumption by the president-elect and vice president-elect. No approval shall be granted to local foundations by the competent authority in accordance with the first paragraph from the voting date of mayors of municipality or city (county) election through the date of office assumption by the mayor-elect.
Before the application is approved under the first paragraph, the competent authority shall publish on its website for 30 days, the cause of the application, the name of the foundation, the reasons of the conversion to public-endowed foundation and the amount of private donation to be received.
In reviewing the application under the first paragraph of the preceding Article, the competent authority shall take into account the following factors:
(1) The impact on the government-endowed foundation’s administrative mission or policy goal;
(2) Rationality and adequacy of the conversion into a public-endowed foundation by comparing to other proposals such as dissolution or merger or consolidation;
(3) Soundness of financial status, management ability and operation after conversion into a public-endowed foundation;
(4) The impact on enhancement of public interest, including increasing operation efficiency and service quality; and
(5) Other supporting factors that it is no longer necessary to maintain the operation in the form of a government-endowed foundation.
A government-endowed foundation shall establish personnel, accounting, internal control and audit systems and submit to the competent authority for approval.
In order to supervise and ensure a government-endowed foundation’s normal operation and sound development, the competent authority may stipulate supervisory regulations in relation to the management and use of properties, items and procedures of investments, performance evaluations, preparation and review of budgets and final accounts, review and approval, part-time pay of directors and supervisors, salary and bonus of the chairperson and other personnel, exercise of director and supervisor duties and other relevant matters.
With regard to a government-endowed foundation of which directors and supervisors shall be selected (designated) or removed by the competent Yuan in accordance with law, regulation or the charter of endowment, the regulations as regards the qualification, conditions, limitations, procedure and other relevant matters of the selection (designation) and removal of the said persons shall be stipulated by the competent Yuan.
Except otherwise provided in this Chapter, the provisions applicable to public-endowed foundations shall apply mutatis mutandis.
If it is necessary for a government-endowed foundation established to provide credit guarantees to use its fund to perform its guarantee liability, subparagraphs (2) and (3) of the second paragraph of Article 45 shall not apply mutatis mutandis.