Want to win an equity investment lawsuit? Master these 5 key points to avoid pitfalls at crucial moments! A corporate law expert tells you how to resolve a litigation crisis (Part 2).

III. Procedural Control: Never lose a lawsuit due to "procedural errors"

Most litigants focus on the "substantive grounds" but neglect the "procedural details." However, Taiwan's Code of Civil Procedure has strict procedural requirements, and even a small oversight can lead to the "dismissal of the claim" or the "loss of the right of appeal." The following three procedural points must be emphasized:

(i) Choose the right court with jurisdiction to avoid being "transferred or dismissed".

The court with jurisdiction over equity investment disputes is usually determined according to the following rules:

1. If there is an agreement, then the agreement shall prevail: If the contract stipulates that "disputes arising from this contract shall be under the jurisdiction of the Taipei District Court", and the agreement does not violate the "exclusive jurisdiction" provision (such as disputes concerning the establishment of a company being under the jurisdiction of the court where the company is domiciled), then the lawsuit must be filed with the agreed court;
2. In the absence of an agreement, the law applies: the court with jurisdiction is usually the court where the defendant resides or the court where the contract is performed (such as the place of equity transfer registration or the place of capital contribution payment).

If the court with jurisdiction is wrong, the defendant can raise an objection to jurisdiction, and the court will rule to transfer the case to the correct court, which will prolong the litigation process. If the case falls under "exclusive jurisdiction" (such as disputes over company mergers or dissolutions), the wrongful lawsuit will be dismissed directly.

(ii) The statute of limitations must not have expired, otherwise the "rights will be void".

According to Taiwan's Civil Code, the statute of limitations for disputes over equity investments is generally 15 years (such as requests for the return of investment funds or confirmation of equity ownership), but some special claims have shorter statutes of limitations:

• Claiming the "right to claim liquidated damages": If the contract stipulates a time limit for the payment of liquidated damages, the limitation period begins to run from the expiration of that time limit;
• The time limit for claiming to "revoke the shareholders' meeting resolution" is 30 days after the resolution is made; otherwise, the right is forfeited.

Even if your claim is well-founded, if the statute of limitations has expired and you cannot prove "interruption of the statute of limitations" (such as written evidence of having asserted your rights against the defendant), the court will dismiss your claim directly. For example, if a shareholder files a lawsuit to rescind a resolution six months after it was passed, the High Court will dismiss the case because it exceeds the 30-day statute of limitations.

(iii) Preservation measures should be applied for in a timely manner to avoid "not being able to get the money after winning the case".

If the defendant has engaged in activities such as "transferring assets" or "concealing equity," even if the defendant ultimately wins the case, they may face the predicament of "inability to enforce the judgment." In such cases, it is necessary to apply to the court for "preliminary attachment" (freezing the defendant's bank accounts and real estate) or "preliminary injunction" (prohibiting the defendant from transferring equity) before or during the litigation.

When applying for asset preservation, you need to provide "information on the defendant's assets" (such as bank account number, real estate address, and share registration information) and pay a "security deposit" (usually 10%-30% of the preservation amount). Taiwanese courts usually make a ruling within 3-5 days after receiving the application. Applying for asset preservation in a timely manner can effectively avoid a "victory without a judgment".

IV. Applicable Law: Finding the right "legal basis" makes your claims more persuasive.

Equity investment disputes involve numerous legal norms, including the Company Law, the Civil Code (Contract Law and Property Law), the Securities Exchange Law (for example, disputes over equity in listed companies), and the Enterprise Mergers and Acquisitions Law (for example, disputes over equity acquisitions). If the legal basis is incorrect, even with sufficient evidence, the case may be dismissed by the court.

For example, in disputes concerning "preferred shareholders' right to request repurchase," if the company is not publicly listed, the provisions of the Company Law regarding "shareholder rights" should apply, along with the stipulations of the investment contract; if it is a publicly listed company, it must also comply with the restrictions on "transfer of shares in publicly traded companies" under the Securities and Exchange Act. In one case, an investor incorrectly cited the Securities and Exchange Act to assert their repurchase right, ignoring the fact that the company was not publicly listed, and was ultimately found by the court to have "misapplied the law," resulting in the dismissal of part of their claim.

Furthermore, precedents from Taiwanese courts are also of significant reference value. For example, the Supreme Court has issued a precedent on the "determination of nominee shareholding relationships," clarifying that "if there is a written nominee agreement and evidence of actual capital contribution, a nominee shareholding relationship can be confirmed even if the shareholder is not registered"—citing relevant precedents in litigation can greatly enhance the persuasiveness of one's arguments.

V. Courtroom Response: "Clear and logical responses" + "Highly targeted cross-examination"

Court hearings are the "final hurdle" in litigation, and many parties lose their advantage due to nervousness during the hearing or by failing to identify weaknesses in the opposing party's evidence during cross-examination. Two things need to be done well in court:

(i) During the defense, the approach should be "to first dismantle and then establish," focusing on the core points.

The logic of your defense should be as follows: first, refute the defendant's arguments (e.g., if the defendant claims the contract was not effective, provide a fully signed contract as proof of its validity), then strengthen your own claims (explain why your claim should be supported by evidence and legal basis). Avoid rambling or repetitive statements, and highlight "what evidence supports your claim and which legal provisions it complies with."

(ii) During the examination of evidence, "raise questions regarding the three aspects of evidence (authenticity, legality, and relevance)".

The evidence submitted by the defendant should be challenged from the following perspectives:

• Authenticity: For example, "This chat log is a screenshot, and the complete conversation is not provided, so its authenticity cannot be proven."
• Legality: For example, "This company ledger was copied by the defendant without authorization, and the method of acquisition was illegal";
• Relevance: For example, "The industry report provided by the defendant is irrelevant to the equity breach of contract in this case and cannot be used as evidence."

If the defendant's core evidence can be successfully challenged, the credibility of the defendant's claims will be significantly reduced, increasing the probability of winning the case.

Fuda Law Firm
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