Market Profiles

FII Market Entry Requirements for Taiwan

RBC IS operates a segregated account structure in this market.

Please refer to 'Market Account Opening Requirements' for information on the market requirements. Clients are requested to refer to the requirements for information purposes only.

For further information or support around accessing this market, please contact your RBC IS representative.

The Taiwan Stock Exchange Corporation
The Taiwan Stock Exchange Corporation (TWSE) was set up in 1961 and began operations in February 1962. Its capital as of June 2015 was USD 207.49 million (TWD 6443.26 million @ 31.052), of which 2% was held by individuals, 22.47% by governmental institutions and public banks, and the remaining 75.53% by private financial institutions and enterprises. The TWSE now operates under the supervision of the Securities and Futures Bureau (SFB).

The TWSE's board of directors and supervisors comprises 15 directors and three supervisors. Six of the directors are non-shareholder professionals appointed by the SFB, and the rest are elected from the shareholders at the TWSE shareholders' meeting.

Taipei Exchange (TPEx), formerly known as the GreTai Securities Market (GTSM)
The Taipei Exchange (TPEx) was founded in November 1994 and was funded by Taipei Securities Association, TWSE, Kaohsiung Securities Dealers' Association and Taiwan Depository and Clearing Corporation (TDCC) (previously Taiwan Securities Central Depository), with contributions of TWD170 million, TWD120 million, TWD0.2 million and TWD60 million respectively.

Currently, the two stock exchanges (TWSE and TPEx) are not linked. The instruments traded on each exchange are different and subject to different listing criteria. All securities are denominated in Taiwan dollars (TWD).

The Taiwan Futures Exchange (TAIFEX, the former Taiwan International Mercantile Exchange)
The Taiwan International Mercantile Exchange Corporation (TAIMEX) was established in September 1997 under the Futures Trading Act, which came into effect on June 1, 1997. The exchange then changed its English name to TAIFEX on April 22, 1999.

The paid-in capital of TAIFEX is TWD2 billion, which is contributed equally (25%) by the four relevant sectors in the securities industry, namely futures, securities, banking and also securities/futures-related institutions, such as the TWSE and the TDCC.

Taiwan Innovation Board (TIB)
TWSE launched TIB on 20 July 2021. TIB is the platform to introduce innovative companies to the public and parallel to the Main Board. Qualified investors include professional institutional investors, high net worth juristic person investor, juristic person or fund and legally incorporated venture capital enterprises are permitted to invest the stocks listed on TIB. Foreign institutional investors can also invest in the stocks listed on TIB as well as the Main Board. The trading method for stock listed on the TIB is the same as the stock listed on the Main Board. Except for after-hour odd lot trading, day trading, margin trading, securities borrowing and lending (SBL) and intraday odd lot trading are not allowed.

Equities (including convertible bonds): Equities are traded via the Fully Automated Securities Trading (FAST) system. The FAST system links the brokers and dealers with the TWSE and TPEx via terminals. FAST automatically processes and matches buy and sell orders based on competitive bids and offers and advises trades executed. 

Bonds: Effective from July 1, 2002, government and municipal bond trading is mainly done via the electronic bond trading system (EBTS) of the TPEx, or negotiated over-the-counter at dealers' premises between 09:00 and 15:00, Monday to Friday. After trading, dealers are required to report transactions to the TPEx by 15.00. Corporate and financial bond trading is done by price negotiations over the counters with authorised dealers, and via the EBTS. Strip bonds are traded on TPEx similar to equities.

Monday to Friday (Equities traded on TWSE and TPEx):

ISIN: Used for equities and bonds.

Other: Equities use a local four digit code. Bonds use a local five digit code.

Financial Supervisory Commission: The Financial Supervisory Commission (FSC) was established in July, 2004 to take over the supervisory responsibilities for the banking, insurance, and securities industries from the Ministry of Finance (MoF). The four bureaus under the FSC are:

• Securities and Futures Bureau (SFB, formerly known as the Securities and Futures Commission - SFC)
• Banking Bureau
• Insurance Bureau
• Financial Examination Bureau.

Securities and Futures Bureau: The Securities and Futures Bureau (SFB) was established on September 1, 1960 and is a bureau of the Financial Supervisory Commission (FSC). The SFB is the operating body for the implementation of government securities policies, the Securities and Exchange Act, and the Futures Trading Act. The SFB supervises the operations and monitors the activities of the Taiwan Stock Exchange, the Taiwan Futures Exchange, the Taipei Exchange and market participants. The SFB also audits the listing applications of public companies and ensures the public disclosure and timely dissemination of fiscal and business information. 

Taiwan Stock Exchange: The Taiwan Stock Exchange (TWSE) was established in 1961 and began operations in February 1962. It is operated under the supervision of the SFB. TWSE is responsible for maintaining centralised trading, securities borrowing & lending (SBL) market, monitoring market order, screening listing applications, and supervising securities firms. It is also delegated by the SFB to review and grant FINI and foreign individual investor investment IDs. 

The Central Bank of the Republic of China (Taiwan) (CBC) is responsible for controlling foreign exchange and interest rate activities and for supervising banks and capital markets.

The Ministry of Finance (MoF): regulates taxation, national treasury/property, and customs.

Listed equities and convertible bonds are immobilised/dematerialised at the Taiwan Depository and Clearing Corporation (TDCC) and transferred via a book-entry system.

Government bonds issued after September 1997 are dematerialised and registered in the FINI's own name as registered with the TWSE, upon settlement at the Central Bank's designated clearing banks. Government bonds issued before September 1997 have mostly been dematerialised and registered in the same way, however a small portion remain in bearer form. Strip bonds with zero coupons are registered in the same way, upon settlement at the TDCC.

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.

The up/down ticks of stocks, warrants or beneficiary certificates varies with the price of the issue: 

The up/down ticks of exchange-traded fund are as follows: 

Effective March 6, 2006 the new scale for REITs is: 

TWD

Negotiable (mostly T+2)

Instruments that can be traded off the TWSE and the Taipei Exchange (TPEx) include money market instruments, government bonds, corporate bonds, unlisted stocks, delisted stocks, privately placed local securities, public tender offer, emerging stocks, TPEx stocks with no foreign ownership cap and funds, all of which are available to foreign investors.

For purchase and sale of unlisted stocks by an investor with FIA status, the investors must obtain prior approval from the Ministry of Economic Affairs (via the investor's local legal agent). 

For sale of delisted stocks by foreign institutional investors (who purchased the stocks while they were listed), the exact cash and securities payment dates are negotiable. 

For purchase of stocks and beneficiary certificates through initial public offering as well as privately placed local securities, investors should give the subcustodian (or appointed local agent) instructions to complete subscription forms and make payments. The exact cash payment and securities receipt timing varies according to the prospectus of the securities issues. 

For participating in public tender offers, investors should give the subcustodian (or their appointed local agent) instructions for share delivery to the designated account of the event and receipt of cash proceeds once available. 

For purchase and sales of emerging stocks, the investors can trade on or off-TPEx and need not to file any application. If the trade is executed on exchange, the stocks would be exchanged via the TDCC’s book-entry system.

However, for those stocks with foreign ownership caps, they can only be traded through TPEx's computerised trading system. Cash and securities are exchanged on T to T+2 at the securities company's counter.

Pricing quotations on off-exchange market instruments can be found in local newspapers and on Reuters. 

Trading hours: Monday to Friday: 09:00 - 15:00

Equity settlement procedures: Settlement is on a T+2 basis. 

Trade date (T)
The client places a trade order with a broker. Upon execution, the broker will send a copy of the execution report to the local custodian on T, late afternoon. Upon receipt, local custodian will pre-check the availability of cash/securities in the FINI's account and advise the investor immediately should the account be short for settlement. The local custodian will also proceed in pre-matching by using brokers' trade execution reports received on hand vs clients' instructions received by T afternoon 6.30 pm. If any revision resulted from clients' instructions received after matching, or late/revised trade execution reports, an updated report will be sent on TD+1 morning. This aims to provide earlier matching status on T and allows our clients more turnaround time to resolve problem trades. 

T+1: The local custodian must receive all settlement instructions by 2:00 pm (local time) at the latest. Upon receipt, local custodian will match the instruction against the broker's execution report to ensure that details are correct and advise both clients and brokers immediately if there is any discrepancy.

By 15:30, custodian will send trade affirmation to the execution brokers and update DVP record via TDCC's pre-settlement function, subject to matched settlement instructions and sufficient cash/stock positions. 

The TDCC updates the DVP transaction during its batch-run on T+1 for value T+2.

T+2: Delivery Versus Payment: The custodian bank delivers stock to the broker by 10:00 for sell trade and the broker credits sale proceeds to the investor's cash account after 11:00. 

Receipt Versus Payment: The local custodian delivers TWD fund to the broker by 10:00 for buy trade and the broker credits the share to the investor's account after 11:00.

Bond settlement procedures 
T (morning): The client places an order with a broker dealer. Local custodian receives the execution report from the broker and checks the availability of cash or securities in the client's account. All settlement instructions must be delivered to the local custodian by 11:00 at the latest on SD. 

T+2 negotiable (SD): The local custodian finishes matching the execution report from the broker with instructions from the client to ensure that details are correct before executing payment or delivering securities. After this, local custodian sends a settlement confirmation to the client.

Effective October 21, 2022, FSC announced a ban on short-selling, in case closing price of the securities on the day falls 3.5% or more, the investors are not permitted to engage in short selling at a price lower than the closing price of the previous trading day.

Qualified FINIs are allowed to participate in SBL transactions either through licensed brokers/securities finance enterprises who act as principal, and all FINIs via TWSE SBL system. Short selling of securities borrowed from licensed brokers, securities finance enterprises and via TWSE SBL system is subject to the following quota control:

• Daily level:Securities sold by all FINIs in any single day should not exceed 30% of the average trading volume in the previous 30 trading days.
• Aggregate level: Securities sold by all FINIs under the SBL measures should not, on a cumulative basis, exceed 10% of the listed shares of any eligible stock and beneficiary certificates 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 listed shares and beneficiary certificates of a particular company. When the combined total of shares sold under the SBL system and margin trading system reaches 20% of the listed shares of a particular company, the TWSE will allocate the remaining quota to the selling of shares under the SBL system and the margin trading system based on the 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 qualified local investors.)

In addition, for FINI borrowers who are privately placed mutual funds or unit trusts, the total value of short sales executed by the FINI shall not exceed 50% of the fund's net asset value in Taiwan. For FINI lenders, no more than 50% of the FINI's holding in a particular line of stock can be on-loan at any given time. 

The Financial Supervisory Commission (FSC) has announced to lift the uptick rule on short selling (under margin short sell and SBL short-sell schemes) for all listed stocks that can be traded on margin. Effective 24 August 2015, investors cannot short-sell all listed stocks that can be traded on margin if their market prices fall below the previous day's closing prices.

In addition, if a stock closes down by the daily limit of 10% on any given trading day, the stock will be excluded from the exemption list and shall follow the uptick rule on the next trading day. The exemption can resume on the following trading day.

FSC revised Regulations Governing Securities Lending by Securities Firms on February 1, 2016:

• Securities firms can borrow securities from and lend securities to their clients, other securities firms or securities financing institutions.
• Securities firms can lend securities to other securities firms or securities financing institutions via the Taiwan Stock Exchange (TWSE) SBL system, to participate in auctions and negotiated securities borrowing offered by securities financing institutions and to fulfil the settlement needs of clients and other securities firms for day trading.
• Securities firms can accept bank guarantees as collateral in connection with securities lending to their clients.
• SBL rollover can be applied twice (one extension of not more than 6 months with the longest borrowing period as 18 months).
• The scope of securities eligible for SBL by securities firms can be the underlying securities of call (put) warrants and the following products listed on the TWSE and the TPEx:

- Single-stock options or single-stock futures
- Exchange traded funds
- Domestic and overseas convertible bonds, or exchangeable corporate bonds
- Overseas depositary receipts

Same-day turnaround trade (also known as 'day trading') for buy-first-then-sell was implemented effective January 6, 2014, and for sell-first-then-buy was effective June 30, 2014. The implement details are listed as below.

1. For day trading, a pair of same-day buy/sell trades shall be executed and net cash settled with the same broker (i.e. a foreign institutional investor (FINI) shall not buy a stock via broker A and sell the stock on the same day via broker B).
2. Eligible stocks are restricted to the listed securities that are approved by competent authorities.
3. The stocks that have been placed under altered trading methods and disposition securities will be excluded.
4. Stocks settlement of same-day turnaround trade can be netting off sell trade placed during after hour trading session (2-2.30 pm) and normal trade placed during regular session (9 am-1.30 pm), excluding securities that require pre-delivery prior to trade execution. Settlement of same-day turnaround trading cannot be netting off odd lot trade (1.40-2.30 pm), purchase trades placed during after-hours trading (2-2.30 pm), block trade (9 am-5 pm), auction (3-4 pm) and tender offer (3-4 pm).
5. FINIs who would like to perform same-day turnaround trading shall sign a consent letter to their execution broker before trading.
6. Brokers in Taiwan can have their own discretion on collateral/margin requirement for investors who conduct same-day turnaround trades (such as control over investors' trading limit, consent letter signed by the investors etc).
7. If an investor does not want to offset buy and sell trades in a given day with a broker, the investor shall advise the broker before market close at 13.30.
8. To provide sell-first-then-buy day trading services to investors, brokers must ensure having sufficient source of shares to fulfil market settlement obligation with the exchanges.
9. For sell-first-then-buy day trading, if investors fail to buy back the stocks during the normal trading hours or in the after-hours fixed-price trading session, investors shall revise the type of sell trade from day trading to short sale of borrowed position on trade date, provided that the investors have existing SBL trading accounts with the executing broker.
10. If investors are not able to buy back or revise as short sale, the executing broker shall alternatively solicit shares from client pool or other brokers via Day Trade SBL platform for the shortfall position in its name for onward lending to the seller/investor on T for settlement.
11. If the executing broker does not secure sufficient shares on T day via Day Trade SBL platform, the executing broker shall borrow the shares on T+1 by competitive auction or negotiated transaction via securities finance corporations. The executing broker shall buy back the shares on T+1 in the name of the executing broker for return on T+3. The executing broker may pass associated costs incurred onto the investors.
12. If the shares are still insufficient on T+2, the Taiwan Stock Exchange (TWSE) or the Taipei Exchange (TPEx) will deal with the trade on T+2 on behalf of the executing broker.

The TWSE also requests execution brokers to conduct internal control in order to mitigate brokers' trading risk.

Not applicable

The Taiwan Depository & Clearing Corporation 
The Debt Instruments Depository and Clearing Co Ltd Taiwan (DIDC) was merged with the Taiwan Securities Central Depository Co (TSCD) on March 27, 2006 and renamed as The Taiwan Depository & Clearing Corporation (TDCC). TDCC is still supervised by the Securities and Futures Bureau (SFB). The total capital as of November 2008 was TWD2.9 billion and 50.43% owned by the Taiwan Stock Exchange (TWSE), 17.96% by Yuanta Securities Finance Co Ltd and 31.61% by other financial institutions and individuals.

The Taiwan Depository & Clearing Corporation (TDCC) has completed the full dematerialisation process of all listed stocks (including emerging stocks) in Taiwan. Securities settlement through the TDCC is not mandatory and currently over 80% of trades are settled within the TDCC. Trades not settled via the TDCC are mainly for bonds. Assets are held on a fungible basis.

There are 2,467 participants in the TDCC as of December 2016. Eligible participants include the FSC, the TWSE, the Taipei Exchange (TPEx), securities firms, financial institutions, insurance companies and custodian banks. Each custodian opens one account with the TDCC with all its custody clients' accounts opened as sub-accounts under this umbrella account in the clients officially approved names. TDCC is the central clearing agent and depository for all shares and bonds listed on the TWSE and the TPEx and short-term papers. Stock certificates are immobilised/dematerialised at TDCC and trades are settled via book-entry on a net settlement basis. All money settlements (except short-term papers) take place outside the TDCC. Custodian banks make payments to and from the brokers.

The major functions of the TDCC are:

• custody of securities;
• book-entry of securities settlement or pledged securities;
• computerised processing of securities-related issues;
• registrar and transfer agent for publicly issuing companies; and
• Cash and clearing of short-term papers (including commercial paper (CP), negotiable certificates of deposit (NCD) and bankers' acceptances (BA)), and particular fixed-income instruments, including financial debts, corporate bonds and provincial/municipal bonds.

Securities eligible to be immobilised/dematerialised at the TDCC include common shares, preferred shares, depository receipts, warrants, beneficiary certificates, government bonds, supra-national bonds issued in Taiwan, corporate bonds, convertible bonds, strip bonds, entitlement certificates and short-term papers issued after April 2004, and financial bonds issued after August 21, 2006. Securities maintained at the TDCC are settled via a book-entry system.

For short-term papers, and particular fixed income instruments, including financial debts, corporate bonds and provincial/municipal government bonds, eligible papers shall be delivered by the bills underwriters to the “Physical Securities Depository Bank (PSDB)” (currently Taiwan Cooperative Bank is the designated PSDB for custody. Details of the bills will be maintained in the TDCC’s “Bills Clearing and Settlement System (BCSS)”. Cash and securities settlements on a DVP (delivery against payment), real-time gross settlement (RTGS) basis. Securities are transferred via book-entry system at TDCC's designated clearing banks. TDCC also handles interest payment and principal redemption. 

However, for short-term papers, a FINI will maintain a securities account for safekeeping and book-transfer of bills, and a cash account for cash settlements, at any of TDCC's designated clearing banks, in the name of the FINI as registered with the TWSE. 

TDCC has announced a new service of simultaneously settling securities and cash on T+2 for particular fixed-income instruments safekept at TDCC, including financial debts, corporate bonds and provincial/municipal governments bonds, with effect from August 21, 2006. If any foreign investor trades in these particular fixed-income instruments, they are required to liaise with local custodians to open a cash account with one of the designated bond clearing banks for cash settlement of the scripless bonds in TDCC.

BIS is an international organisation, which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI)uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

BIS Settlement Model 2 is the current settlement processing of listed equity in Taiwan - systems that settle securities transfer instructions on a gross basis, with final transfer of securities from the seller to the buyer (delivery) occurring throughout the processing cycle, but settle funds transfer on a net basis, with final transfer of funds from the buyer to the seller (payment) occurring at the end of the processing cycle.

Book-Entry: Securities are re-registered by TDCC, prior to record date of a corporate action. Listed shares issued in registered form are reregistered by the issuing company or its transfer agent, typically same day. Securities are lodged in the subcustodian's sub-account at TDCC.

Physical: Nominee registration in the custodian’s name is not allowed. Physical holdings are registered in the name of the beneficial owner. Government bonds issued after September 1997 have mostly been dematerialised and registered in the FINI’s own name as registered with the TWSE, upon settlement at the Central Bank’s designated clearing banks. However, a small portion issued before 1997 are still in bearer form. Corporate bonds are mostly in bearer form.

Company / registrar.

Equities 
Equities are registered in the foreign institutional investor (FINI)'s own name, as registered with the Taiwan Stock Exchange (TWSE). Nominee registration in the custodian's name is not permitted. The registration process is handled by the Taiwan Depository and Clearing Corporation (TDCC). 

The TDCC is responsible for effecting registration with the company registrars before the end of book close period for a corporate action record date. Shares can be traded during the registration period. 

Bonds 
Government bonds issued after September 1997 are dematerialised and registered in the FINI's own name as registered with the TWSE, upon settlement at the Central Bank's designated clearing banks. Government bonds issued before September 1997 have mostly been dematerialised and registered in the same way, however a small portion remain in bearer form. Strip bonds with zero coupons are registered in the same way, upon settlement at the TDCC. 

From July 1, 2006, new issuance of corporate bonds of Initial Public Offerings (IPO) and Secondary Public Offerings (SPO) has mostly been dematerialised and safekept and settled at the TDCC. 

Money market instruments 
Commercial paper issued after April 2004 are immobilised and registered in the FINI's own name as registered with the TWSE, upon settlement at the TDCC's designated clearing banks. Other short-term bills, including negotiable certificates of deposit and bankers acceptances, can be immobilised and registered in the same way, or can be in bearer form.

Shareholdings in this market may be required to be disclosed by the beneficial owner, particularly when such shareholdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue we encourage you to consult your legal counsel.

Failure to comply with the reporting requirements in this market may lead to penalties and / or other sanctions.

Any investor holding more than 10% of the total issued shares of a public issuing company becomes the major shareholder, and must file a report via client's local legal agent (normally a law firm), with the Securities and Futures Bureau within 10 calendar days of taking possession, stating the purpose and the sources of financing for the purchase. Subsequent major shareholder reporting is only required when both of the following conditions are met:

a) Any accumulative increasing/decreasing of shares exceeds 1 per cent of the company's total issued shares.

b) When the investor's shareholding ratio (i.e. shareholders' acquired shares against the company's total issued shares) increases/decreases by 1 per cent.

If only a) above is applicable to the major shareholder, there is no need to report to the authorities.

In addition, if the major shareholder wants to sell stocks, they have to send a disclosure report to the company at least three days before the actual sales, unless the number of shares to be sold is less than 10,000 shares per day. The company will then post the details on the TWSE's Market Observation Post System and the SFB and TWSE will closely monitor the information disclosed on the Post System. Insiders are allowed to make changes on their previously declared transaction methods for their unexecuted position (e.g. from general trade to block trade, off-exchange trading etc). Investors must report the change to the TWSE via the local company within one month from the last disclosure. 

In the event that the major shareholder sells the listed securities within six months after its acquisition, or repurchases the securities within six months after its sale, the company shall claim for the recovery of any profit realised from the sale and purchase.

The Office of the President has announced the amendments to the Banking Act of the Republic of China (Banking Act), the Financial Holding Company Act of the Republic of China (Taiwan), and Insurance Act which were effective as of January 2, 2009, January 23, 2009 and December 10, 2010 respectively. 

• Any person who, individually or jointly, under trust, contract, agreement or other means of mutual consent entered with another person, who holds more than 5% of a bank's, financial holding company’s or insurance company’s issued shares with voting rights must report to the competent authority within 10 calendar days upon acquisition at trading basis.
• Once the above 5% has been reached any subsequent 1% increase or decrease of the bank's, financial holding company’s or insurance company’s total issued shares should also be reported to the competent authority within 10 calendar days upon acquisition at trading basis.
• Any person who, individually or jointly, under trust, contract, agreement or other means of mutual consent entered with another person, who intends to acquire more shares over 10%, 25% or 50% of a bank, financial holding company or insurance company has to obtain prior approval from the authorities.

Same person or by the principal, his/her spouse and children under 20 years of age, totally held the number of a banking/insurance company’s shares exceeds one percent of the bank/insurance company’s outstanding voting shares, such principal shall notify the bank/insurance company.

Buy-ins are rare as procedures are in place to ensure that trades settle on settlement date (SD). 

Under the current T+2 settlement cycle, all unsettled trades are reported to the Taiwan Stock Exchange (TWSE) or the Taipei Exchange by T+2. If an execution broker does not receive trade affirmation from an investor's custodian on T+1, the broker is required to report the trade to the stock exchange as early as T+1 or the latest on T+2, as one of the following:

• Error trade or revision of execution account (T+2 by 10:00)
• Failed Trade (Late Settlement) (T+2 by 11:00)
• Trade default (T+2 by 11:00)

On the other hand, the broker has to settle the executed trades with the exchange on T+2 even if the investor fails the delivery obligation. The execution broker, rather than the investor, will initiate the buy-in process when there are insufficient securities for settlement due to an investor's error/default, an execution error by the broker or late settlement. 

The broker is required to report to the TWSE by T+2, then move the trade into its own book, initiate stock borrowing from the temporary settlement coverage system and buy-in. The associated loss/cost may be passed to the investor subject to negotiations between the broker and the investor.

If an investor has incurred a default trade, they can resume trading as long as they have cleared the money owed to the broker. If the default is cleared with the execution broker within three business days of the settlement date, an investor's trading account can be retained for trading. Any longer and the investor has to re-open trading accounts with designated brokers prior to resuming trading.

The fail record will be recorded in the TWSE’s website and can be accessed by the local brokers. If the default trade cannot be resolved, the investor will be suspended from trading for five years.

Please note that Taiwan is not a true DVP market. Securities and cash are not settled simultaneously via the same clearing centre.

All types of institutional investors (including all foreign and domestic institutional investors) are able to participate in the SBL scheme launched by the TWSE, subject to the following rules and restrictions:

- To prevent insiders of public issuing companies from engaging in SBL trading, the following control measurements shall be implemented:

1) Foreign institutional investors (FINI) if not under the *designated type shall disclose its top three shareholders whose holding position is 30 per cent or more and their nationality. Institutional shareholder, if any, shall disclose the same down to the individual shareholder.

2) For fixed rate/best-price rate SBL transactions where the TWSE acts as guarantor, the eligible stock collateral that a non-designated type of FINI can provide is limited to the Taiwan 50 Index ETF and its constituent stocks.

*The designated types of FINIs are foreign banks, insurance companies, securities firms, fund management companies, foreign government investment institutions, pension funds, mutual funds, unit trusts, investment trusts, trust companies, academic or charitable organisations, and privately placed mutual funds and unit trusts.

SBL transactions will be terminated starting from the next business day if an eligible stock falls into the scope of particular financial indicators announced by the TWSE. The eligible securities for SBL will be adjusted by the TWSE in consideration of market situation. Lenders and borrowers shall check with their designated brokers on the details of financial indicators.

The relevant details are as follows: 

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 15:30 

Eligible stocks: Eligible listed stocks on TWSE and Taipei Exchange (TPEx) and exchange-traded funds (ETFs) as announced by TWSE on quarterly basis. Currently stocks eligible for SBL trades include listed stocks with margin trading authorisation and listed stocks which have issued derivative products such as warrants, depository receipts, convertible bonds etc. Please refer to the following website for eligible stocks: https://www.twse.com.tw/en/products/sbl/overview.html

Lending period: maximum of six months (can be rolled over twice (each roll-over up to six months) with the maximum 18-month life cycle).

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 TWSE) 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 TWSE SBL system. 

Authorization Letter to Appoint Local Agent: FINI to authorize sub-custodian. The authorization letter allows the local agent to:  open SBL accounts; execute, sign, deliver relevant forms, deeds or documents (e.g. Letter of Entrustment) and undertake operational reporting or any other acts in the name of FINI as required by relevant rules/regulations and/or directions TWSE or other relevant authorities and/or as necessary and appropriate in relation to its role as local agent and; facilitate payments, broker commissions and stock exchange tariffs (if not paid for by securities borrower), tax payments/refunds.

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

• Daily level: Securities sold by all FINIs in any single day should not exceed 30% of the average trading volume in the previous 30 trading days.
• Aggregate level: Securities sold by all FINIs under the new SBL measures should not, on a cumulative basis, exceed 10% of the listed shares of any eligible stock and beneficiary certificates for SBL.
• Market level: The combined total of the securities sold under the SBL system and the margin trading system should not exceed 25 per cent of the listed shares and beneficiary certificates of a particular company. When the combined total of shares sold under the SBL system and the margin trading system reaches 20 per cent of the listed shares of a particular company, the TWSE will allocate the remaining quota to the selling of shares under the SBL system and the margin trading system based on the ratio of 'outstanding number of shares sold under the SBL system as of today' to the 'outstanding number of shares sold under the margin trading system as of today'. (Margin trading is only available to qualified local investors.) If the allocated number of shares contains an odd lot, the odd-lot portion will be truncated. If the quota allocated to short selling under the SBL system is less than 1.5 per cent of the listed shares of a particular company, 1.5 per cent will be allocated to the SBL system. The number of shares that can be sold under the SBL system for the next day will be recalculated on a daily basis until the combined total of shares sold under the SBL system and the margin trading system is down to 20 per cent or below.

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

In addition, for FINI borrowers who are privately placed mutual funds, the total value of short sales executed by the FINI shall not exceed 50% of the fund's net asset value. For FINI lenders, no more than 50% of the FINI's holding in a particular line of stock can be on-loan at any given time. 

Effective from July 28, 2008 the short sell of borrowed securities is allowed via blocking trading mechanism.

Restriction on sale of borrowed securities 
The Financial Supervisory Commission (FSC) has announced to lift the uptick rule on short selling (under margin short sell and SBL short-sell schemes) for all listed stocks that can be traded on margin. 

If, however, a stock closes down by the daily limit of 10% on any given trading day, the stock will be excluded from the exemption list and shall follow the uptick rule on the next trading day. The exemption can resume on the following trading day.

In addition, the TWSE has announced the following guidelines regarding short-selling activities in the stock borrowing and lending market:

• When new borrowed trades are to be settled on T+1, the short-selling orders can only be executed through the investor's original borrowing broker.
• If short-selling trades are placed on the same day as new borrowed trades (trade date - TD), the selling broker is required to confirm with the borrowing broker after trade placement, to ensure that new borrowed positions are executed/matched on TD.
• The borrower should provide the selling broker with the borrowing information and agree with the broker to check borrowing details.

TWSE further issued a ruling letter prohibiting SBL brokers to 1) place buy and short-selling pair-matching block trade orders via the same trading account, or 2) place short-selling pair-matching block trade order without a confirmed trading counterpart's buying orders to match the trade execution and subsequently cancel the selling order due to unmatched status.

Collateral
For fixed-rate and best-price SBL trades where TWSE acts as guarantor, the required collateral ratio is140% of the value of the loaned securities. Once the ratio falls below 120%, the TWSE will automatically request additional collateral via the borrower's broker to restore the 140% ratio. 

Collateral in excess of outstanding borrowings can be withdrawn. The type of collateral is limited to TWD/USD, EUR, JPY, GBP, AUD and HKD cash (per the Central Bank's guidance, TWD collateral is not allowed effective August 2, 2010), the list of eligible locally listed securities announced on TWSE web site, local scripless government bonds and bank guarantees. Each type of collateral, except cash, has to be further discounted using different discount ratios. The value of eligible stocks listed on TWSE and TPEx will be further discounted by 30% and 40% respectively. 

The value of scripless government bonds will be discounted by 10% of the face value, and the maturity date of the scripless government bond must cover the return date. Collateral must be pre-delivered to TWSE's designated collateral account before the TWSE matches the SBL transaction. 

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. cash and the locally listed stocks which are safekept in the TDCC and scripless government bonds) 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. 

Effective from August 18, 2008, TDCC simplified the stock pledge procedures by adopting on-line pledge, instead of visiting TDCC in person. The change will benefit Foreign Institutional Investors (FINIs) when using local stocks as collateral to participate in negotiated securities borrowing and lending activities, and when using local stocks to pledge for borrowing TWD.

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 TWSE SBL system. 

The TWSE has further announced additional T+1 settlement cycle for negotiated SBL transaction, effective from July 28, 2008. 

With the implementation of T+1 settlement cycle, the borrower and lender may cancel the trade before 10:00 on T+1 before TWSE inform the Central Depository for book transfer at 10:30. The borrower may sell the borrowed stock via the same execution broker before the book-transferred process at the depository. However, if the borrower cannot settle the sale of borrowed position with the execution broker, the TWSE will check the root cause of the fail. If it is the lender/borrower’s error/default, TWSE will make a decision on penalty to either declare a default trade or suspend the SBL trading to the responsible party.

Repatriation restriction: FINI account holders are able to repatriate the sales proceeds of borrowed securities as long as the sales proceeds is still within borrowers' net remitted-in funds in Taiwan. However, the repatriation of cash collateral received by a lender from negotiated type securities lending is still not allowed. 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 and the Securities and Futures Bureau on a monthly basis. 

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

Government bond lending 
Transaction sessions: Monday to Friday 09:00 - 11:00
Designated offshore FINIs are allowed to lend out the scripless government bonds through the government bond SBL centre launched by TPEx. FINIs are also allowed to borrow government bonds from securities firms.

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 TPEx will act as guarantor and will require that the collateral be safekept at TPEx's collateral account.

The FSC issued ruling letters stating that FINIs engaging in SBL trading are henceforth permitted to borrow securities, with the exception of central book-entry bonds (i.e. government bonds), from licensed brokers (per ruling letter on August 18, 2006) or securities finance enterprises (per another ruling on June 15, 2007) For SBL trading with licensed brokers or securities finance enterprises, FINI (if not eligible to trade via TWSE SBL) shall have to hold normal trading accounts with the intermediary brokers for more than three months.

The FSC also announced on August 22, 2006 that insiders (including directors, supervisors, managers and shareholders holding more than 10% of the total shares of the company) of public issuing companies are prohibited from engaging in SBL trading. A source within the SFB additionally advised that if an insider has outstanding SBL transactions involving shares of its company, prior to becoming an insider, the outstanding SBL positions transactions will be permitted to be held until maturity. The insider is not allowed to engage in any new SBL trading on their own company.

• Business Guarantee Fund
• TWSE Settlement and Clearing Fund
• TPEx Settlement and Clearing Fund
• Default Reserve Fund
• Securities and Futures Investor Protection Fund

These funds compensate investors in the event of broker default.

The following accounts are required for investment in the Taiwan securities market:

• A securities account for holding shares.

A TWD demand deposit account for settlement of securities transactions, collection of dividends, payment of charges and credit of interest income, if any.

This is an FII market. Please contact your RBC Investor Services' Client Manager before making portfolio investments.

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

Unlisted stocks can be available to foreign investors, provided that a Foreign Investment Approval (FIA) has been granted by the Investment Commission of Ministry of Economic Affairs. Investors intending to invest in unlisted securities are required to appoint a local CPA firm or a lawyer to process the FIA application.

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, TWSE/TPEx-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 TWSE has issued a ruling letter to further clarify that the offshore ETFs that FINIs/FIDIs are now allowed to invest, such as the Hang Seng H-Share Index ETF (ISIN code: HK2828013055, local stock code 0080) and Hang Seng Index ETF (ISIN code: HK2833027330, local stock code 0081), are only limited to exchange trades on the secondary market.

This ruling also stipulates that FINIs/FIDIs are still not allowed to participate in the offshore ETF's redemption and subscription via the primary market. Foreign investors who are interested in trading this product may contact local brokers for more details.

The following industrial sectors have specific aggregate foreign ownership limits:

Custodian banks submit reports within 10 days after each month-end to the TWSE (securities transactions) and the central bank (foreign exchange transactions) who monitor foreign investments. SFB can also access the media report.

With effect from April 1, 2008, FINIs/FIDIs need to obtain Foreign Investment Approval (FIA) status for one single investment of over 10% of total shares by an issuing company. This is to replace the previous requirement where a FINI/FIDI needs to obtain FIA status if the amount exceeds USD50 million in one single investment. FIA account is required to hold these shares and subsequent major shareholder reporting must be made through local legal agent until the share holding falls below 10%. 

Outlined below are scenarios where FINI/FIDI is required to obtain a FIA status via its local legal agent (generally a legal firm):

• Purchase of unlisted stocks (excluding emerging stocks), subsequently subscribe the associated rights issues or dispose the shares;
• If a FINI/FIDI's stock holding becomes unlisted or de-listed due to a tender offer, acquisition, insolvency etc, then a FIA is required for keeping the unlisted/de-listed shares and the subsequent disposal, unless the disposal is to be made within one year from delisting;
• Purchase of over 10% stake of any company with shares listed on exchanges or registered as emerging stocks in one single investment.

Effective October 15, 2008 the FSC abolished the restriction on investment quota for FIDIs. Previously the FIDI investment quota was capped at USD 5 million. 

30% rule for non-equity investments
FINIs / FIDIs investment in all government bonds, corporate bonds and bank debentures, regardless of residual tenor, and non equity investments should not exceed 30% of the ID holder’s net remitted-in funds. 

- Government bonds

- Over-the-counter (OTC) traded, TWD-denominated Taiwanese share options/swaps, as well as foreign share options/swaps traded at licensed brokers and banks in Taiwan

- OTC TWD-denominated structured notes linked to Taiwanese or foreign equities and interest products

- Money-market instruments (including repos, bankers' acceptances or commercial papers etc that shall be limited to those maturing within 90 days from the date of purchase)

- Money-market funds

- TWD interest rate derivatives (including forward rate agreements, interest rate swaps, interest rate options etc)

- Premiums and net clearing amounts paid on OTC TWD-denominated structured notes and OTC options stripped from local convertible bonds

- Corporate bonds (privately placed convertible corporate bonds are exempted)

- Bank debentures 

- NTD Bonds 

FINIs/FIDIs who act as option writers cannot repatriate the premiums received from the derivatives until the option is matured. Such restrictions are also applied to structured notes investment unless the premium is related to foreign equity products.

The SFB has issued a letter to clarify that the 30 per cent rule should be monitored daily, and the amount of non-equity instruments to be calculated shall be the settlement amount. As such, investors are reminded to pay attention when arranging fund repatriation, which will reduce the net remitted-in capital, and may result in the breach of the 30 per cent rule.

Principal can be repatriated freely. Earnings can be repatriated provided a tax guarantor has been appointed and a concurrence has been obtained. Repatriation of investment income, including capitalgains, dividend/interest income and other income, can be effected after client’s appointed tax guarantor has completed the auditing and provided the concurrence. The role of tax guarantor is generally performed by a local certified public accountant (CPA) firm to ensure all tax obligations on investment earnings are duly fulfilled before the funds are repatriated out of Taiwan.

Foreign investment restrictions
All registered foreign institutional / individual investors (FINIs/FIDIs) enjoy an unlimited quota. The funds remitted into Taiwan by FINIs/FIDIs shall be for the purpose of securities investment. 

FINIs and FIDIs can repatriate capital after it has been remitted into Taiwan and converted to Taiwan dollars. Repatriation of remitted-in principal can be made freely. 

Investment income, including capital gains and interest/dividend income, however, can only be repatriated after the appointment and agreement of a tax guarantor. For designated FINIs engaging in securities borrowing and lending (SBL) via the Taiwan Stock Exchange SBL system, the cash collateral received by a lender cannot be repatriated. 

The local authorities reiterate that FINIs/FIDIs shall comply with their FX declaration that the purpose of fund injection is for securities investment and shall not keep the excessive balance in cash accounts to avoid speculation of the Taiwan dollar.

Spot (same-day, next-day, two-day), forward, swap and options contracts can be executed. Liquidity beyond six months depends on the market situation and the control exercised by Central Bank of the Republic of China (Taiwan). Forward and SWAP for direction of purchasing TWD is not allowed.

Currency and forex market
The TWD is the official currency of Taiwan. As per the current currency and fund code list on the International Organization for Standardization (ISO) website, the ISO code for TWD is 901-2, while TWD is the term most commonly used by Reuters/Bloomberg and local custodian.

The TWD is a freely floating currency, but is only available for physical delivery in Taiwan. The tenor of forex contracts can range from spot to beyond one year, although there is less liquidity for longer terms. Investors can buy or sell TWD through banks with forex licenses granted by the Ministry of Finance and the CBC in Taiwan. However, most investors prefer to execute forex through the custodian banks, to facilitate securities settlements.

Inter-bank Remittance System of Financial Information Services Corporation
The Inter-bank Remittance System (IBRS) is a system operated by Financial Information Services Corporation (FISC) to facilitate the remittance of transactions among different financial institutions. FISC is established by a fund under the management of the Ministry of Finance. FISC's IBRS allows real-time transfer of funds between client accounts held with banks.

In Taiwan, this system is used by brokers’ clearing banks and investors’ custodian banks for payments of equities purchased/sold through the stock exchanges and the emerging stock market. Payment of fixed income may be made via this system or by cheque. The system generally closes down at 18:00 local time. 

Cheques
Banks and financial institutions maintain accounts with Bank of Taiwan and clear funds by issuing or receiving Bank of Taiwan's cheques to one another. The cheques shall be deposited in the beneficiary's account by 15:00 for same day value. A less used method for settlement is by cheques drawn on other banks. 

Inter-bank Fund Transfer System of Central Bank of the Republic of China (Taiwan)
The Inter-bank Fund Transfer System is a large value TWD payment system that was established in 1995 and is operated and governed by Central Bank of the Republic of China (Taiwan). It functions electronically on a real-time basis. All licensed banks are members of the system.

This system is used for settlement of government bond only if both counterparties of a transaction are members of the system. For example, for settlement of commercial paper, NCDs and associated resell/repo agreements, Taiwan Depository & Clearing Corporation (TDCC) clears the funds between bills dealers and the bills clearing banks via the Central Bank's inter-bank fund transfer system. The system closes at 16:30 local time. 

Automated Clearing House of the Taipei Clearing House 
Automated Clearing House (ACH) is another clearing system launched by Taipei Clearing House (TCH) in June 2002 for bulk electronic payments. ACH transfers are exchanged bilaterally through TCH, who will store, sort and forward in batch to member banks. 

This system settles low-value, high-volume fund transfers on an overnight basis. Funds are available on T+1 for credit transfers and T+2 for debit transfers. ACH's credit transfer is similar to autopay-out in Hong Kong.

Local financial institutions may provide temporary intra-day TWD financing to foreign investors due to time zone difference for purchase of warning/special treatment/full delivery stocks, where pre-delivery of cash to a broker prior to trading is required. In addition, financial institutions can provide TWD financing for foreign investors' securities trading, long-term equities investment or real estate investment (this is not applicable to FINI/FIDI) but such TWD financing must be secured facility. In addition, local custodians have to ensure that the TWD financing is used for settlement and report the relevant information to the regulators on a monthly basis.

In addition to obtaining financing from financial institutions, foreign investors are also able to apply for short-term financing from qualified securities firms or securities finance enterprises up to a certain limit for settlement purpose.

Cash dividends
Cash dividends are paid by company registrars generally one month after the record date on the announced payment dates via cheques or On-line Batch Payment System (OBPS)/Automated Clearing House (ACH). Dividends received by cheques take two to seven days for receipt and clearing before they become available for credit into clients accounts (as contractual income is not allowed in Taiwan), while those received via OBPS interbank transfer/ACH transfer are available on the announced payment dates.

Stock dividends and bonus issues
Stock dividends are paid out from companies' earnings and are subject to the 21% withholding tax rate for foreign investors, while bonus issues are paid out from capital reserves and are tax exempt. The payment date of dividends and bonus issues is approximately one to three months after the record date. 

Generally company registrars pay stock dividends and bonus issues on the announced payment dates via the Taiwan Depository & Clearing Corporation book-entry system. Entitlements will be credited to the investor's account upon actual receipt (as contractual income is not allowed in Taiwan). Fractional shares are normally charged as expense by company registrars.

Quarterly, semi-annually or annually (Majority, during the third quarter of each year)

Monthly for TWD demand savings account

TWD interest rate of FINI investors has been reduced to 0.00% per annum effective 7 January 2011.

Actual/365-day basis

Rights issues
Subscription (exercise) period is usually one month for majority of companies. However, the company might apply for extension of subscription period for further half a month if the subscription is unsuccessful. Investors’ instructions to take up rights issues should be sent one business day (by 09:00 to the subcustodian) before subscription deadline, subject to sufficient cash being available on the same date. Shares payment date is approximately half a month to one month after the last subscription date.

For listed stock (including emerging stocks), the eligible holding for participating in a profit distribution/entitlement is calculated based on the settled position as of record date. As registration is automatically done by the TDCC, all rights related to corporate actions are protected.

Unrestricted voting rights. Split voting was approved in mid Dec 2011. Qualified shareholders shall submit a split voting application with a declaration letter to the issuing company via local custodian at least five days prior to the meeting date. If the application is not accepted due to incomplete documentation, the issuing company shall advise the shareholder no later than two days prior to the meeting date. Once a FINI is registered with the company as a split voting qualified shareholder, the qualification will be valid until the FINI submits a withdrawal registration or terminates its investor ID. The Split Voting Declaration Letter is permanent valid without yearly renew after applied split voting.

No

Normally provided in Chinese, and it to be briefly translated to English by sub-custodian banks. Annual general meetings (AGMs) are announced at least 60 days in advance, and extraordinary general meetings at least 30 days in advance. Minutes (in Chinese) are prepared and forwarded via mail to each shareholder by the company within 20 days.

Normally provided in Chinese, and is to be briefly translated to English by sub-custodian banks.

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

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.

If a foreign institutional investor (FINI) holds more than 300,000 shares (inclusive), then a FINI must attend in person or assign its local agent or representative to attend and exercise voting rights. The FINI and its agent or 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 in the agenda.

In addition, according to the Proxy Voting Operation Guidelines, an election vote will not be processed unless the foreign investor instructs a specific election vote for the election of a director or supervisor. The instruction should clearly indicate the name/ID number of the candidate to be elected. Otherwise, the relevant vote would be deemed as an 'abstain' by the foreign investor. Also, under the existing procedures, the local custodian is not required to speak on behalf of a foreign investor for votes against any resolution, unless authorised. Hence, if the foreign investor would like its opinions to be represented during the AGM/EGM, the reason for voting against resolution must be stated clearly on its instruction.

According to Article 172-1 of Company Law, shareholder(s), who hold 1% or more of the total issued shares of a company, may make a written proposal to the company for discussion at a regular shareholders' meeting. This proposal may only contain one subject and is limited to 300 words. A proposal containing more than one subject and/or over 300 words shall not be incorporated into the agenda. The company will issue a public notice as to the place and the deadline for shareholders to submit such proposals. Shareholders who submit such a proposal must attend, in person or by a proxy, the regular shareholders' meeting where the proposal is to be discussed and must take part in discussing in the meeting.

Non-resident withholding tax is 21%

Standard non-resident withholding tax is 20%.

Non-resident withholding tax is 15% for the following:

• Short term bills
• Government/Corporate bonds/ Financial Debentures
• Securitisation products e.g. ABS, REITs, REATs
• Repos on all the above

In June 2013, the Legislative Yuan has passed the third reading of revised CGT, which was initially introduced effective 1 January 2013. Effective 2015, investors who sell TWD1 billion in shares within the calendar year will be subject to 0.1 per cent tax (deemed basis) on their stock trades exceeding TWD1 billion or 15 per cent tax on the net capital gains (actual basis)

Investors' trading in the followings will still be subject to 15 per cent CGT effective January 1, 2013:

• Trading unlisted stocks
• Selling more than 100,000 shares of emerging stocks in a year
• Selling more than 10,000 shares from initial public offerings (IPO). Investors are entitled to a discounted tax rate if they hold their positions for more than one year.
• Non-resident individual investors

FINIs without a permanent establishment (i.e. local office) or business agent in Taiwan are exempted from the CGT. FINIs who have a permanent establishment (i.e. local office) or business agent in Taiwan will be subject to an alternative minimum tax (AMT)* rate of 12% effective January 1, 2013.

Effective from January 1, 2016, the individual investors including FIDI, are not subject to CGT.

*AMT scheme: The Legislative Yuan has announced an AMT rate with a minimum tax rate at 12 per cent effective 1 January 2013. This scheme is only applicable to local institutions and FINIs who have a permanent establishment (i.e. local office) in Taiwan. If a FINI has a local office in Taiwan, the realised capital gains derived from the FINI's proprietary assets of the account shall be aggregated into the profit and loss of its local office in Taiwan on an annual basis to determine the AMT payable on an annual basis. If the AMT is higher than the income tax calculated based on the sole income of the FINI's local office in Taiwan, then the local office shall pay the AMT amount.

Investors are entitled to enjoy discount tax rate if they hold their position for more than one year.

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 authorised 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.

* The tax shall not exceed an amount that together with the corporate income tax payable on the profits of the company paying the dividends constitutes 40% of that part of the taxable income out of which the dividends are declared. As such, the withholding tax rate for investors domiciled in Singapore remains at 20%.

None

Investors will be exempted from transaction tax when trading corporate bonds / financial debentures and listed bond ETFs for the period between January 1, 2017 and December 31, 2026. 

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 bonds, corporate bonds, local convertible bonds and foreign currency denominated bonds are exempt.

The transaction tax rate when investors exercise the warrants in cash settlements is 0.1%.

Brokerage commission is negotiable between investors and brokers, and payable by both the buyer and the seller. If a broker charges a fee higher than 0.1425 per cent, the broker shall advise the client in advance.

Equity Futures (including stock index futures and stock futures): 0.002% on contract value (buyer and seller)

USD/CNT foreign exchange (FX) futures contract (RTF), USD/CNH FX futures contract (RHF), EUR/USD FX futures contract (XEF) and USD/JPY FX futures contract (XJF) - 0.0001% on the contract value.

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% security 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).

Listed bond ETF: Exempted from 01 January 2017 to 31 December 2026

Withholding tax on cash dividends, interest and other income is deducted at source for foreign institutional/individual investors (FINIs/FIDIs). 

Issuing company can choose to distribute capital reserve by cash and/or shares. Cash dividends derived from capital reserve distributed by the issuing company which fall into any of the following categories will be subject to income tax:

1. Capital reserve resulting from gifts
2. Premium from trading of treasury stock
3. The difference between issue price and redemption price of preferred stocks
4. Book value transferred from unexercised expired warrants
5. Confiscated share subscription amount paid by shareholders who are unable to complete the full payment within the deadline

The determination of whether a particular distribution falls into the above definitions can be made by a resolution at a shareholder meeting. If no such resolution is passed, the definition will be based on issuer's accounting record.

Please refer to the following website for the list of rates of withholding tax of dividends, interest and royalties under the respective tax treaties: 

https://www.mof.gov.tw/singlehtml/191?cntId=63931

Taiwan Holiday Calendar

• Taiwan Stock Exchange twse.com.tw
• Central Bank of China cbc.gov.tw
• Taipei Exchange www.tpex.org.tw
• Taiwan Futures Exchange www.taifex.com.tw
• Securities and Futures Bureau www.sfb.gov.tw
• Taiwan Depository and Clearing Corporation www.tdcc.com.tw
• Financial Supervisory Commission www.fsc.gov.tw