ࡱ > 5 7 2 3 4 q` R bjbjqPqP 2 : : x * f f f f f f f z ^ ^ ^ 8 2 z ˑ ( $ h ( ] f /! /! /! ( f f . . . /! v f f . /! . . F " f f V M ^ - 2 T v 0 ˑ '. V f V . { 0 ( ( . ˑ /! /! /! /! z z z z z z z z z z z f f f f f f [ H Y P E R L I N K " h t t p : / / w w w . s f b . g o v . t w / e - s f b / e - n e w s / e - n e w s l e t t e r s / n e w s l e t t e r _ i n d e x . a s p " U P ] 0[ H Y P E R L I N K " h t t p : / / w w w . s f b . g o v . t w / e n s f c i n d e x . a s p " H O M E ] N e w s l e t t e r N o : 4 3 J a n u a r y 1 , 2 0 0 8 I . N e w s a n d E v e n t s 0 0 ( H Y P E R L I N K \ l " -Nee^O" C h i n e s e ) A d j u s t l i mits on investments in China, Hong Kong, and Macao area securities from domestic securities investment trust funds and discretionary investment assets. On 19 November 2007, in accordance with offshore fund investment regulations, the FSC adjusted limits on the use of domestic securities investment trust funds and discretionary investment assets for investment in securities of the China, Hong Kong, and Macao area. Investment in securities of mainland China securities markets may now not exceed 0.4% of the net asset value of the fund or the discretionary investment account, while aggregate investments in H shares and in red-chip shares may not exceed 10% of the net asset value of the fund or the discretionary account. Securities investment consulting enterprises (SICEs) are allowed to use their own funds to invest in approved or effectively registered offshore funds From 26 November 2007, SICEs are allowed to use their own proprietary funds for the purchase of offshore funds offered and sold in Taiwan, which have obtained the approval or effective registration. The aggregate total that a SICE invests in securities investment trust funds and offshore funds may not exceed 30% of the SICE's net worth, as stated in the CPA audited financial report for the most recent accounting period. In addition, the amount of its funds invested in any securities investment trust fund or any offshore fund may not exceed 10% of the total net asset value of the given trust fund or offshore fund (or 10% of the offshore fund's global fund scale, for offshore funds with multiple types of stock). Amend regulations governing the permitted scope of foreign securities exchange markets and subject securities for securities firms engaged in brokering trades of foreign securities On 20 November 2007, the regulations stipulating the scope of foreign securities exchange markets and the subject securities that securities firms may deal in when brokering trades of foreign securities were modified. The amendments specify that securities firms may not engage in brokered trading of the securities of the mainland China area securities markets, or its state-run enterprises, red-chip stocks, or stocks issued by component companies of the Hong Kong Hang Seng China-Affiliated Corporations Index. For stocks traded on the securities exchange markets of other foreign countries, a securities firm may not broker trades of securities of companies registered in the mainland China area or securities determined by the government to have been issued by a mainland-invested enterprise except to the ETF products. Supplementary regulations issued governing implementation of legal compliance systems at exchange-listed and OTC-listed securities firms and securities firm subsidiaries of financial holding companies On 22 November 2007, the FSC issued regulations requiring that, for exchange-listed and OTC-listed securities firms and securities-firm subsidiaries of financial holding companies which had established legal compliance departments from 1 July 2007 in accordance with Article 26 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets, the positions of legal compliance department supervisors and personnel may not be filled by persons concurrently serving as supervisors or personnel in their internal auditing departments. The regulations further specified the qualifications necessary for the supervisors and associated persons of legal compliance departments. Information on the prosecution of major securities law violations and related judgments is provided in Chinese and English at the website of the Securities and Futures Bureau of the Financial Supervisory Commission, Executive Yuan: HYPERLINK "http://www.sfb.gov.tw/e-sfb/e-news/Latest Announcements.doc" http://www.sfb.gov.tw/e-sfb/e-news/Latest Announcements.doc. Information on Taiwan's financial competitiveness can be found at the FSC competitiveness page: HYPERLINK "http://www.fscey.gov.tw/competitive/item2.aspx" http://www.fscey.gov.tw/competitive/item2.aspx. II. Market Wrap-up As of the end of November, HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls" 688 companies were listed on the Taiwan Stock Exchange, an increase of HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls" 7 against the previous month. The total capital issued was NT$ HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls" 5,592.23 billion, an increase of NT$ HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls" 17.99 billion over the preceding month, and the market capitalization was NT$ HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls"21,594.36 billion, a decrease of NT$HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls"2,630.47 billion over the preceding month. As of the end of November, HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls"550 companies were listed on the GreTai Securities Market, an increase of HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls" 7 against the previous month. The total capital issued was NT$ HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls"739.03 billion, a decrease of NT$HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls"2.1 billion against the preceding month, and the market capitalization was NT$ HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls"1,942.21 billion, a decrease of NT$HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t01.xls"301.66 billion against the previous month. In November, the trading value of shares on the Taiwan Stock Exchange was NT$HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t09.xls"2904.82 billion, a decrease of NT$HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t09.xls"585.09 billion over the previous month, while the trading volume were HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t11.xls"67.52 billion shares, a decrease of HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t11.xls"14.96 billion shares compared with the previous month. As of the end of November, the accumulated net inward remittance of foreign investors was US$HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t20.xls"138.14 billion, a decrease of US$HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t20.xls"1.55 billion over the preceding month. There are currently HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t22.xls"133 securities firms, HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t35.xls"19 futures commission merchants, HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t22.xls"39 securities investment trust enterprises and HYPERLINK "http://www.sfb.gov.tw/statistics/point/9611/t22.xls"150 securities investment consulting enterprises. III. Measures related to futures trading, please refer to the website of Taiwan Futures Exchange ( HYPERLINK "http://www.taifex.com.tw/chinese/home.htm" http://www.taifex.com.tw/chinese/home.htm) IV. Q&A Investment quotas for foreign investors Under the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Investors, foreign investors are divided into two categories: foreign institutional investors (FINIs) and foreign individual investors (FIDIs). While FIDIs are subject to a US$5 million investment quota, FINIs are free of an upper limit on investment. However, in a few specific industries foreign investors are still subject to investment ceilings under relevant acts or regulations. Investment scope for offshore foreign investors The scope of investment in Taiwan securities markets open to offshore foreign investors is as follows: Stocks, bond conversion entitlement certificates, and Taiwan Depositary Receipts issue privately placed by listed, over-the-counter (OTC), or emerging-stock companies. Securities investment trust fund beneficiary certificates placed publicly or privately. Government bonds, financial bonds, ordinary corporate bonds, convertible corporate bonds, and corporate bonds with warrants. Beneficial securities placed publicly or privately by trustee institutions, or asset-backed securities placed publicly or privately by special-purpose companies. Call warrants and Put warrants. Other securities approved by the competent authority for the securities industry, such as underwritten call/put warrants in IPO prior to initial listing, real estate investment trust beneficial securities and real estate asset trust beneficial securities placed publicly or privately, listed/GTSM beneficiary certificates, open-ended beneficiary certificates, foreign-currency-denominated fund issued by SITEs, underwritten stocks in IPOs prior to initial GTSM listing and underwritten GTSM stocks in rights offerings, beneficiary certificates prior to initial listing, NT dollar bonds issued in Taiwan by international financial organizations, and preferred shares issued by listed/GTSM companies, securities trust fund privately-placed by SITEs, private securities trust funds placed by SITEs and foreign currency-denominated securities trust fund privately-placed by SITEs. Additionally, Funds that have been duly and timely remitted into Taiwan for the purchase of domestic securities and that have not yet been invested may be used as follows (with the total value of such use not to exceed 30 percent of the amount remitted in, except in the case of outright bond trading): Investment in government bonds, time deposits, money market instruments and money market funds, and the net amount paid on NT dollar premiums for engaging in trading of OTC equity derivatives, OTC NT dollar interest rate derivatives, and options-side transactions on convertible bond asset swaps, and on settling the price difference of swaps. Investments in NT dollar time deposits shall be limited to duration of three months, with a one-time extension of three months allowed at expiration. Investments in money market instruments, limited to bills within 90 days of expiration. Requirements over the outward remittance of investment principal, capital gains and the other investment gains by foreign investors. After receiving permission to invest in Taiwan, foreign investors may apply to remit investment capital and investment earnings out of the ROC. However, outward remittances of capital gains and stock dividends may be made from realized earnings only. Applications for foreign exchange remittance for investment capital and earnings shall be handled in accordance with the Act for the Regulation of Foreign Exchange (under the purview of the Central Bank). When a foreign investor intends to repatriate investment earnings, the investor's agent or representative shall submit documents evidencing the filing of a tax return and payment of taxes by an agent/representative approved by the tax authorities and carry out exchange settlement in accordance with the Act for the Regulation of Foreign Exchange; however, during a period when assessment of ROC income tax on capital gains from securities transactions is suspended, the agent or representative may submit a tax clearance certificate from the tax authorities and carry out exchange settlement in accordance with the Act for the Regulation of Foreign Exchange. 4. Do overseas employees of an exchange-listed, OTC-listed, or emerging-stock company need to make an application to a certain agency in order to sell bonus shares? When making an outward remittance after the sale of bonus shares, what documents should they submit to the bank for verification? No application to the Securities and Futures Bureau or the MOEA Investment Commission is necessary in regard to bonus shares for overseas employees of an exchange-listed, OTC-listed, or emerging-stock company, or sale of those shares. The employee will need to submit a photocopy of their passport and related documents to a securities firm to open an account for the sale of the shares. For exchange-listed companies, this shall be done in accordance with Article 77, paragraph 1, subparagraph 2 of the Operating Rules of the Taiwan Stock Exchange Corporation; for OTC-listed and emerging stock companies, Article 46, paragraph 1, subparagraph 2 of the GreTai Securities Market Rules Governing Securities Trading on Over-the-Counter Markets will apply. With regard to the documents necessary for outward remittances in connection with sales of bonus shares, in accordance with Point 5, paragraph 5 of the rules issued by the Foreign Exchange Department of the Central Bank, the Directions for Banking Enterprises Assisting Customers in Declaring Foreign Exchange Receipts and Disbursements or Transactions, the employee's company must fill out a foreign exchange transaction declaration and a listing of the given shares, after which the proceeds from the sale of shares can be remitted. 5. Exercising shareholder's rights for offshore foreign investors The voting rights of a foreign institutional investor outside of Taiwan ("offshore foreign institutional investor") holding shares in a public company in Taiwan may be exercised as follows: a. Exercise electronically or by means of a written form in accordance with Article 177-1 of the Company Act; b. Exercise through appointment of a company conforming to Article 3, paragraph 2 of the Regulations Governing Handling of Stock Affairs by Public Companies; c. Exercise through appointment of a domestic agent or representative to exercise voting rights at the shareholder meeting; d. Exercise through an appointment by the domestic agent or representative, as authorized by the offshore foreign institutional investor, of a party other than the domestic agent or representative to exercise voting rights at the shareholder meeting. An offshore foreign institutional investor that appoints a company as indicated in point 2 of the preceding paragraph or a person as indicated in points 3 and 4 therein to exercise voting rights at a shareholder meeting shall in each case clearly indicate in the letter of appointment its instructions regarding the exercise of voting rights on each proposal. An offshore foreign institutional investor may not give a proxy form issued by the public company to a proxy solicitor or proxy agent. 6. Restrictions on investment of money market instruments for offshore foreign investors The government's opening of Taiwans securities market to offshore foreign investors is primarily oriented toward drawing investment into securities on the centralized exchange market. Investing in money market instruments is purely for short-term cash management needs. The cap of 30 percent should be sufficient for this purpose. Therefore, currently there are no plans to raise the ceiling. Pre funding Issues in Taiwan Domestic financial institutions in Taiwan since 4 May 2004 have been allowed to provide intraday credit to foreign investors to assist foreign investors who, due to time differences, are unable to make timely remittance of funds to complete settlement. Some Taiwan securities firms instituted their own requirement on foreign investors to provide settlement funds in advance (i.e., prefunding) when they place an order, causing inconvenience to foreign investors. A late settlement system has therefore been adopted for foreign investors to postpone settlement until 6 p.m. of the third business day after the date of the trade under certain circumstances, such as a discrepancy between holidays in different time zones, interruptions in telecommunications or natural disaster. The deadline for securities firms to report default by foreign investors shall be expended to the third business day after the date of the trade. The TSEC has amended Article 76 of the Operating Rules of the Taiwan Stock Exchange Corporation on August 1, 2005, repealing the provision that an investor may not open an account and engage in trading for a period of three years after a conclusive finding of settlement default. The FSC allowed Overseas Chinese and Foreign Nationals to borrow funds for settlement engaging in trading listed and GTSM securities from securities firms, securities finance enterprises and financial institutions on June 2, September 13 and December 15, 2006, respectively. Disclosure of the investment positions of foreign investors The FSC does not disclose investment information of individual foreign investors, but foreign investors are nevertheless obligated to comply with reporting requirements. Locking period of stocks The trading of stocks held by foreign investors is not subject to a "locking period". Off-exchange transactions Article 150 of the Securities and Exchange Act provides that trading of listed securities shall be conducted on a centralized securities trading market operated by a stock exchange. However, paragraph 4 of the same Article empowers the Competent Authority to make provisions for permitting off-exchange transactions in exceptional situations. For example, a foreign investor who has received approval from the Investment Commission of the Ministry of Economic Affairs under the Act Governing Investment by Foreign Nationals to transfer assets to another foreign investor may do so through off-exchange trading. Many foreign investors have invested in Taiwan stocks through such off-exchange channels over the years. Under current law, securities listed on the GreTai Securities Market (GTSM) can be traded off-market. But, in those cases of securities for which the relevant authorities have duly set a foreign investment ceiling in accordance with law, foreign investors (who must have obtained approval or registration in accordance with the Regulations Governing Securities Investment by Overseas Chinese and Foreign Investors) are required to trade such securities through the GTSM trading system. However, only a very few OTC stocks are subject to this requirement. Most GTSM stocks can also be traded by foreign investors via price negotiation at the business places of securities firms. After each market close, the TSEC also provides auction and tender offer systems in which securities prices are negotiable to satisfy various investors demands. The latest reforms on block trading system in Taiwan In order to encourage large-volume traders to undertake block trades so as to reduce the impact on the pricing of ordinary trades, the FSC will implement two-stage adjustments of the current block trading system. The first stage, set for implementation on 29 January 2007, the current intraday trading timeframes will be extended to 20 minutes and the trade price flexibility will be widened from 2 percent to 3.5 percent. Besides, the other measures which including mechanism of matching block trade, T+2 settlements, and elimination of pre-funding system were launched on 28 May 2007. Foreign ownership restrictions Taiwan lifted limits on total/individual foreign shareholding in public companies from 30 December 2000. Applicable acts and regulations may in a few instances limit the percentage of equity holdings by foreign nationals in companies in certain industries (such as postal industry, telecommunications, and shipment) to meet policy needs related to national interests in the economic, social, or cultural spheres. Most developed countries have similar policies, and the practice in Taiwan is in line with developed-market standards. Odd-lot trading In the past, offshore foreign investors were permitted to sell stocks in odd lots, but not to buy them. To meet the varied trading and investment demands of foreign investors, the FSC announced on 22 July 2005 that offshore foreign investors are also permitted to buy odd lots. Permission for asset transfers between offshore foreign investors with different ID numbers but where the final beneficiary is the same person A foreign investor may open multiple depositary accounts in Taiwan, as long as each account bears the same investor registration number. Assets may be transferred freely between such accounts, without the need for a buy-sell process. The FSC further announced that transferring of assets accounts involved belonging to the same final beneficiary legal entity and there is no violation of off-exchange trading rules. Moreover, the FSC has eased rules relating to signing documents by a great number of final beneficiaries. Evaluation of the MSCI revision of the Limited Investability Factor Morgan Stanley Capital International (MSCI) raised the Limited Investability Factor (LIF) applied to the MSCI Taiwan Index to 1 from the former 0.75 effective after market close on 31 May. This adjustment has raised the international standing of Taiwan's securities market and pushed Taiwan into the top spot in the MSCI Emerging Markets (EM) Index, and has helped to boost investor interest in Taiwan stocks, attract a stronger influx of foreign capital, and enliven and expand Taiwan's securities markets. Reformation for FTSE In its list of country classifications announced in September 2004, the FTSE Group upgraded Taiwan and South Korea from its Provisional Watch List for Developed Markets to its Watch List for Developed Markets. In response, the FSC formed a special working group in December 2004 to study and launch further market reforms in Taiwan, and held overseas road shows actively. To support an upgrade of Taiwan's securities market to Developed Market status, the FSC has launched a series of improvements aimed at further deregulating and internationalizing the market. For example: introducing a settlement grace period mechanism for foreign investors, easing requirements for foreign investor participation in the securities borrowing and lending system, streamlining the foreign investor registration system, simplifying asset transfers between foreign investors with different ID numbers, relaxing off-exchange trading systems, as well as completely opening foreign investors to engage in futures transactions for hedging and non-hedging purposes, allowing to trade through individual accounts or omnibus accounts, allowing to borrow money from securities firms and securities financing enterprises and allowing to borrow money in NT dollar from banks. In addition, there will be adjustments to the block trading system and an adjustment or easing of the system for regulating securities firm reporting of out-trades. The aforesaid policies will facilitate the internationalization of our securities market Note: If you expect to receive this newsletter, or have your name deleted from the sending list, or have your email information changed, please send to HYPERLINK "mailto:newsletter@sfb.gov.tw" newsletter@sfb.gov.tw.If you hope to know more about the Taiwan's securities and futures markets, please surf the websites of HYPERLINK "http://www.sfb.gov.tw/ensfcindex.htm" Securities and Futures Bureau, HYPERLINK "http://www.tse.com.tw/docs/eng_home.htm" Taiwan Stock Exchange, HYPERLINK "http://www.taifex.com.tw/ENG/e_index.asp" Taiwan Futures Exchange, HYPERLINK "http://www.gretai.org.tw/e_index.htm" GreTai Securities Market, HYPERLINK "http://www.tscd.com.tw/english/edefault.htm" Taiwan Securities Central Depository.Disclaimer: The SFB did its utmost to ensure that the information in newsletter is complete and true. All materials on this newsletter are for general information only. They are not legal or other professional advice and shall not be relied on as such. The SFB and its employees do not warrant the accuracy and completeness of the materials and disclaim all liabilities for eventual loss or damage. Links to external websites are provided purely for convenience. The SFB has no control over the websites and does not assume any responsibility for their contents. Inclusion in this website of any document from a third party or the provision of links does not constitute endorsement of the contents. Copyright Notice: Copyright protected materials on this newsletter shall not be used for commercial purposes. The SFB permits accurate reproduction of the materials for non-commercial use. When third party copyright is involved, permission for reproduction must be obtained direct from the appropriate copyright owner. 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