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Taiwan Stock Exchange Equities

Equities: Ordinary shares, preferred shares, cumulative preferred shares, participating preferred shares, callable preferred shares, convertible preferred shares, warrants, beneficiary certificates (issued by securities investment trust companies which manage the investment trust fund and invest in the securities market), entitlement certificates, Taiwan depository receipts (TDRs), emerging stocks, Exchange Traded Funds (ETFs).
Bonds: Bonds are generally listed on the Taiwan Stock Exchange (TSE) or the GTSM. Types of bonds include government bonds, municipal bonds, corporate bonds (straight, convertible, callable), financial bills, strip bonds, and asset backed securities, supra-national bonds issued in Taiwan and foreign currency denominated bonds listed on the GTSM.
Money market: These include time deposits, treasury bills, negotiable certificate of deposits (NCDs), and commercial paper (CP). In general, money market instruments are discount securities issued in tenors of up to one year.
Debt: Governement bonds, municipal bonds, corporate bonds, callable corporate bonds, convertible corporate bonds, financial bonds, dragon bonds, foreign currency denominated bonds listed on the GTSM.
Other: Futures and Options

Board Lots
Equities: TSE, GTSM and over-the-counter:
round lot = 1,000 shares
Debt: round lot = TWD100,000 face value

Each deal must be in a round lot, or in multiples thereof. Odd lot trading of equities is processed by designated dealers between 13:40 and 14:30, Monday to Friday.

Dividend Payment Frequency:
Annual, typically during the third quarter of each year

Interest Payment Frequency
Monthly for TWD demand savings account

Interest Accrual Rate:
Actual/365-day basis

Corporate Actions

Common Events: Cash dividends, rights issues, stock dividends, bonus issues, periodic redemptions
Rights Tradeable: No
New Shares from Exercised Rights: Yes

Foreign Investor Restrictions
Unrestricted voting rights

Shares Blocked

Meeting Notices/

Provided in English. Annual general meetings (AGMs) are announced at least 60 days in advance, and extraordinary general meetings at least 30 days in advance. Minutes are prepared and forwarded via mail to each shareholder by the company within 20 days.

If a FINI holds more than 300,000 shares of a public issuing company, then they must attend in person, or assign their local agent/representative to attend and exercise voting rights. The FINI or the agent/representative may also appoint a third party agent, however the appointment letter must be delivered via the local agent and must clearly indicate the FINI’s voting instruction for each item on the agenda

Meeting Outcome
Provided in English.

Company Reports
On request, subject to availability. Reports may only be in Chinese.

Power of Attorney:
Not required.

For the election of a director or supervisor, the client’s instruction should clearly indicate the name/ID number of the candidate to be elected. Otherwise, the relevant vote would be deemed as a "no vote" by the foreign investor.

Foreign Ownership
Market Entrance Requirements
This is an FII market. Please contact your RBC Dexia Investor Services representative.

Foreign investors wishing to invest in Taiwan must obtain Foreign Institutional Investor (FINI) status via registration with the Taiwan Stock Exchange.


Allowable investments include listed securities and beneficiary certificates, mutual funds, government/bank/corporate debt (including convertible bonds and strip bonds), and foreign currency denominated bonds, futures/options listed on the Taiwan Futures Exchange Corporation (TAIFEX), money market instruments, depository receipts, privately placed securities investment trust funds, TSE/GTSM-listed warrants, entitlement certificates , public offering asset-backed securities issued by trust institutions , TWD interest rate derivatives products , and other investments approved by the SFB, although this list is not exhaustive.

The following industrial sectors have specific aggregate foreign ownership limits:

Wire and cables industry, aviation industry (admin related) 50%
Public nature gas industry 49.99%
Aviation transportation industry 33.33%
Railway transportation industry 49%
Broadcasting industry:
- Wireless TV
- Cable TV
- Satellite TV
Telecommunications industry:
- Direct investment in first category telecom companies 49%
- Direct and indirect investment in first category telecom companies 60%
- Direct and indirect investment in Chunghwa Telecom 40%
Banking, trust co., investment trust industry The individual holding by a single entity and the total holdings by related entities in a company in such industry shall not exceed 25% of the total outstanding shares.

Repatriation Policy
Principal can be repatriated freely. Earnings can be repatriated provided a tax guarantor has been appointed and a concurrence has been obtained.

Securities Lending

The following designated foreign institutional investors (FINIs) are allowed to participate as borrowers and lenders in the securities borrowing and lending (SBL) scheme launched by the Taiwan Stock Exchange (TSE), subject to the following rules and restrictions:

1. Foreign banks
2. Insurance companies
3. Securities firms
4. Fund management companies
5. Foreign government investment institutions
6. Pension funds
7. Mutual funds (shall be offered to the public)
8. Unit trusts (shall be offered to the public)
9. Investment trusts
10. Trust companies
11. Academic or charitable organisations

Three types of transaction for SBL:

* Fixed rate
* Best price rate (i.e. bid offer competitive rate)
* Negotiated (customised rate)

Transaction sessions: Monday to Friday, 09:00 to 15:00

Eligible stocks: Eligible listed stocks on TSE and GreTai Securities Market (GTSM) and exchange-traded funds (ETFs) as announced by TSE on quarterly basis. Please refer to the following website for eligible stocks:

Lending period: Six-month maximum (can be rolled-over once up to six months)

Partial return: Allowed

Lending/Borrowing account: A designated FINI can use its existing trading account opened with an eligible broker (which has signed a master SBL agreement with TSE) for SBL trades. The designated FINI shall instruct its local custodian to sign the Letter of Entrustment with the eligible broker to execute SBL trades via the TSE SBL system.

Quota Control: A designated FINI is allowed to short sell the borrowed stocks within the following quota control:

* Daily level: Securities sold in any single day should not exceed 3% of the issued and outstanding shares of any eligible stock for SBL.
* Aggregate level: Securities sold should not, on a cumulative basis, exceed 10% of the issued and outstanding shares of any eligible stock for SBL.
* Market level: The combined total of the securities sold under the SBL system and margin trading system should not exceed 25% of the issued and outstanding shares of a particular company. When the combined total of the securities sold under the SBL system and margin trading system reaches 20% of the issued and outstanding shares of a particular company, the TSE will allocate, based on ratio of "outstanding number of shares sold under the SBL system as of today" versus "outstanding number of shares sold under the margin trading system as of today". (Margin trading is only available to local eligible investors.)

The quota control measures are applicable to all SBL trades conducted by eligible local borrowers and FINIs and the borrowing still cannot be used for onward lending purpose.

For fixed-rate and best-price SBL trades where TSE acts as guarantor, the required collateral ratio is 140%. Collateral in excess of the required 140% of outstanding borrowings can be withdrawn. The type of collateral is limited to TWD cash, the list of eligible locally listed securities announced on TSE web site, scripless government bonds and bank guarantees. Each type of collateral, except TWD cash, has to be further discounted using different discount ratios. The value of eligible stocks listed on TSE and GTSM will be further discounted at a rate of 70% and 60% respectively. The value of scripless government bonds is discounted by 10% of the face value, and the maturity date of the scripless government must cover the date the borrower returns the securities. Collateral must be pre-delivered to TSE’s designated collateral account before the TSE matches the SBL transaction. (Please note that the designated FINI as borrower is not allowed to obtain local bank guarantees as per the current market regulations.)

For negotiated (customised)-rate SBL trades, the collateral that the designated FINI can receive (as lender) or provide (as borrower) can be onshore (i.e. TWD cash and the locally listed stocks which are safekept in the TDCC or offshore if both the borrower and the lender are FINIs. If locally listed stocks are used as collateral, the listed stocks shall be pledged with the lender’s (or lender’s custodian bank) pledge account opened with TDCC. The borrower or the designated FINI’s custodian will follow the standard procedures to pledge the securities on behalf of the designated FINI. Each pledge can take up to one day.

Settlement: Same day settlement. Please note that the lending securities must be pre-delivered to the local broker before the SBL trade is input into the TSE SBL system.

Repatriation restriction: FINI account holders are able to repatriate the sales proceeds of borrowed securities, and such repatriation shall be reported to the central bank as principal repatriation. However, the repatriation of cash collateral received by a lender from negotiated type securities lending is still not allowed to be repatriated. Nevertheless, the cash collateral received can be utilised to buy securities or pay other fees in Taiwan.

Reporting: The local custodian bank of the designated FINI has to record the designated FINI’s SBL transactions daily, and provide standard reporting on lending/borrowing activity to the Central Bank of China and Securities and Futures Bureau on a monthly basis.

Fees: The TSE, local broker and custodian charge handling fees.

Government bond lending
Designated offshore foreign institutional investors (FINIs) are also allowed to lend out (but not borrow) the scripless government bonds through the Government Bond Securities Borrowing and Lending (SBL) Centre launched by GTSM.

For negotiated type of SBL transactions, a FINI can only accept cash or registered government bonds as collateral. For fixed-price and bid-offer types of SBL transactions, the GTSM will act as guarantor and will require that the collateral be safekept at GTSM’s collateral account.


Dividend Tax Rate
Non-resident withholding tax is 20%.

Interest Tax Rate
Non-resident withholding tax is 20%.

Capital Gains Tax Rate: None

Note: The Ministry of Finance (MoF) has announced that the Alternative Minimum Tax (AMT) Scheme with minimum tax rate at 10%, effective from January 1, 2006. This scheme is only applicable to local individuals and institutions, and to a FINI that has a permanent establishment (i.e. local office) or business agent in Taiwan. According to Article 10 of the Income Tax Act, the local office and business agent are described as follows:

The term "fixed place of business" as used in this Act refers to fixed places for operation of business, including administrative offices, branch or sub-branch offices, business offices, factories, workshops, warehouses, mining fields, and construction sites, however, this shall exclude warehouse or storage sites used exclusively for purchase of goods and maintenance shops not used for processing or manufacturing products.

The term "business agent" as used in this Act means an agent fulfilling any of the following requirements:

1. Where the agent, in addition to representing its principal in the purchase of goods, is authorized to regularly represent the principal in making business arrangements and in signing contracts;
2. Where the agent regularly keeps in store goods of its principal and delivers the same, for its principal, to others; and
3. Where the agent regularly accepts, for its principal, order for goods.

Tax Treaties

Australia Malaysia Swaziland
Belgium Netherlands Sweden
Demark New Zealand United Kingdom
Gambia Senegal Vietnam
Indonesia Singapore
Macedonia South Africa

Stamp Duty None

Other Taxes:
Transaction tax on equities: 0.3% of sale value, paid by the seller.

Trading tax on beneficiary certificates, warrants and Taiwan depository receipts (TDRs) is 0.1% of sale value, paid by the seller. The transaction tax rate for the exercise of warrants is 0.3% on the value of the underlying shares. Government, corporate and local convertible bonds are exempt.

Brokerage commission is payable by both buyer and seller. The commission rate does not exceed 0.1425% of trading value.

Equity Futures (excluding stock index futures and stock futures): 0.025% on contract value (buyer and seller)

Interest Rate Futures: tax rates vary per product:

* For 30-day commercial papers (CP) interest rate futures: 0.0000125 % on contract value
* For 10-year government bond futures: 0.000125 % on contract value.

Options: 0.1%

If settled by securities, the party who delivers the securities is subject to a 0.3% securities transaction tax on exercise price;

If a call writer fails to deliver underlying stock for settlement, both the writer and the buyer are subject to a 0.025% futures transaction tax on 110% of closing stock price on expiration date. Please note that if a put buyer fails to deliver underlying stock for settlement, the exercise application will be invalidated.

Exchange traded fund: 0.1% (seller).

Withholding tax on cash dividends, interest and other income is deducted at source, at a standard rate of 20% for foreign institutional investors (FINIs).