When a limited company changes its organization into a company limited by shares in accordance with the Company Act, the existence and continuity of its status as a juristic person is not affected.  When the company’s right on immovable property is changed to the name of the company limited by shares, Paragraph 1 of Article 2 of the Deed Tax Act is not applicable.  Pursuant to the principle of taxation by law, no deed tax shall be levied.  However, this is not applicable to the transfer of the right on immovable property of a company which changes its organization without following the law.

       The petition for Interpretation was filed before the amendment of the Company Act on May 9, 1980.  However, as far the applicability of the provisions regarding change of organization of a limited company is concerned, the interpretation is still necessary, and the petition is accepted.

       As expressly provided in Paragraph 1 of Article 2 of the Deed Tax Act, any purchaser and acceptor of a dien, exchange, donation and partition of immovable property, and any acquirer of ownership thereof by virtue of possession shall procure and use official deed forms and pay deed taxes.  For a limited company that changes its organization to a company limited by shares, the change of its rights on immovable property to the name of the company limited by shares is not within the scope of tax payment under the said provision of law.  The purpose of a limited company that changes its organization in accordance with Article 106, Paragraph 3, of Article 156, Article 411, and Article 415 of the Company Act is to encourage the public to make investments and to promote economic development rather than set up a new company.  Therefore, the existence and continuity of its status as a juristic person is not affected.  The rights and obligations originally belonging to the limited company are to be enjoyed or assumed by the company limited by shares after change.  It does not make any difference even if such rights are related to immovable property.  This is crystal clear in view that when the Company Act was amended on May 9, 1980, the substantive requirements for a limited company to change its organization were not amended; such change was deleted from the reasons for dissolution of a limited company; the provisions for merger of companies no longer apply mutatis mutandis; and amendment registration was expressly required so as to eliminate the concerns in practice.  Therefore, when a limited company changes its organization into a company limited by shares, Paragraph 1 of Article 2 of the Deed Tax Act does not apply to the change of the company’s right on immovable property to the name of the company limited by shares.  Pursuant to the principle of taxation by law, no deed tax shall be levied.  However, if the change is not made according to law and if the right on immovable property is transferred, such situation shall still be handled according to law. 

*Translated by Dr. C.Y. Huang of Tsar & Tsai Law Firm.