The Latest Improvement on Foreign Investment

Allow foreign investors to invest in privately-placed foreign-currency-denominated securities investment trust fund (2006/12/15)

On December 15, 2006, the Financial Supervisory Commission (hereafter FSC) allowed offshore overseas Chinese and foreign nationals to invest in private securities investment trust fund placed by Securities Investment Trust Enterprises (SITEs) to enlarge the investment scope.

Foreign nationals without domicile in Taiwan are allowed to borrow from financial institutions (2006/11/15)

As of November 15, 2006, the FSC allowed offshore overseas Chinese and foreign nationals investing in Taiwan securities to have New Taiwan Dollar loans from domestic financial institutions exempted from the restrictions of Article 21, subparagraph 3 of the Regulations Governing Investment in Securities by offshore overseas Chinese and foreign nationals that would otherwise prohibit them from extending loans or providing collateral. Their custodian institutions must record the information required by Article 22 and report it to the FSC and the Department of Foreign Exchange of the Central Bank of China within ten days after the end of each month.

The daily information on cash borrowing or intraday credit arrangements of offshore overseas Chinese or foreign nationals at domestic financial institutions and their financing arrangements at securities firms or securities finance enterprises shall be reported by fax by their custodian institutions to the Securities and Futures Bureau of the FSC and the Department of Foreign Exchange of the Central Bank of China on the following trading day.

First offering and issuance of international bonds (2006/11)

In order to attract foreign enterprises to Taiwan to carry out fund raising, the FSC has undergone deliberations on liberalizing related regulations in line with international practice, and has amended and issued the Regulations Governing the Offering and Issuance of Securities by Foreign Securities Issuers and related orders. It has also reviewed the GreTai Securities Market’s Rules Governing Management of foreign currency-denominated International Bonds and approved their rules and regulations.

There is already one successful issuer of foreign currency-denominated bonds, Deutsche Bank A.G., with an issuance of US$250 million and was listed on GTSM on 1 November 2006.

Foreign investors are allowed to finance for settlement needs from securities finance enterprises (2006/9/13)

Offshore overseas Chinese and foreign nationals can obtain cash financing from securities finance enterprises for settlement needs with TSEC-listed or GTSM-listed stocks and be no longer subjected to the restrictions of Article 21, subparagraph 3 of the Regulations Governing Investment in Securities by offshore overseas Chinese and foreign nationals stipulating that they may not provide collateral.

Offshore overseas Chinese and foreign nationals who obtain cash financing for settlement needs according to aforesaid subparagraph shall comply with the relevant provisions of July 22, 2006, which stipulates that their custodian institutions shall keep detailed records of transactions in accordance with Article 22 of the Regulations Governing Investment in Securities by offshore overseas Chinese and foreign nationals and report those transactions to the FSC and the Department of Foreign Exchange of the Central Bank of China within ten days at the end of each month.

Foreign investors are allowed to borrow securities from securities firms (2006/8/18)

On August 18, 2006, the FSC has allowed offshore overseas Chinese and foreign nationals to borrow securities from securities firms, exempted from the restrictions of Article 21, subparagraph 2 of the Regulations Governing Investment in Securities by offshore overseas Chinese and foreign nationals, which stipulates that foreign investors should not sell securities they do not hold, and of subparagraph 3 stipulating that they may not provide collateral. Offshore overseas Chinese and foreign nationals borrow securities other than book-entry central government bonds, shall deal with a securities firm with an existing brokerage agreement for no less than three months.

Loosen the restrictions on investment by offshore overseas Chinese and foreign nationals in foreign-currency-denominated funds issued by securities investment trust enterprises (SITEs) (2006/8/4)

1. Pursuant to Article 4, paragraph 1, subparagraph 6 of the Regulations Governing Investment in Securities by offshore overseas Chinese and foreign nationals, the FSC approved investment in foreign-currency-denominated funds issued by SITEs as part of the scope of securities investments for offshore overseas Chinese and foreign nationals.

2. Pursuant to Article 22 of the Regulations Governing Investment in Securities by offshore overseas Chinese and foreign nationals, custodian institutions shall record detailed information of investment in the aforesaid foreign-currency-denominated funds by offshore overseas Chinese and foreign nationals everyday, and shall also report relevant information including the statement of total value of foreign-currency-denominated assets in inventory, statement of inward and outward remittances of funds, and the detailed statement of securities trading and inventory to the FSC and the Department of Foreign Exchange of the Central Bank of China monthly.

Approval of Cash borrowed from securities firms by offshore overseas Chinese and foreign nationals for settlement of listed or OTC securities (2006/6/20)

For settlement needs of purchasing exchange-listed or OTC-listed securities, offshore overseas Chinese and foreign nationals may finance their purchases with a loan from a securities firm, and will not be subject to Article 21, subparagraph 3 of the Regulations Governing Investment in Securities by offshore overseas Chinese and foreign nationals, which otherwise prohibits such parties from providing loan collateral. In addition, an offshore overseas Chinese or foreign national borrowing funds to engage in the aforementioned transactions shall comply with the Regulations Governing Securities Firms in Handling Securities Business Money Lending and other applicable provisions, while the investor’s custodian institution shall record the information as required in Article 22 of the Regulations Governing Investment in Securities by offshore overseas Chinese and foreign nationals, and shall report the information within ten days after the end of each month to the FSC as well as the Foreign Exchange Department of the Central Bank of China.

Offshore overseas Chinese and foreign nationals are allowed to invest in private securities investment trust fund placed by securities investment trust enterprises (2006/5/16)

To encourage foreigners investing our securities market, on May 16, 2006, the FSC promulgated decree allowed offshore overseas Chinese and foreign nationals to invest in private securities investment trust fund placed by securities investment trust enterprises.

Offshore overseas Chinese and foreign nationals are permitted to invest in call (put) warrants during underwriting period (2006/2/24)

Loosen the requirements on the exercise of voting rights by the offshore foreign institutional investor (2006/2/3)

On 3 February 2006, the FSC announced that an offshore foreign institutional investor that exercises its voting rights in writing or by electronic transmission in accordance with Article 177-1 of the Company Act, or that appoints a company complying with Article 3, paragraph 2, of the Regulations Governing Handling of Stock Affairs by Public Companies to exercise its voting rights, may be exempted from the requirement that it ?gshall appoint a ROC agent or representative to exercise the voting rights?h as set out in the Regulations Governing Investment in Securities by offshore overseas Chinese and foreign nationals.