116 PART I With respect to U.S. holders who are individuals, certain dividends received from a foreign corporation  in taxable years beginning before January 1, 2011, on shares (or ADSs backed by such shares) that are readily  tradable on an established securities market in the United States may be subject to reduced rates of taxation,  provided further that the foreign corporation was not, in the year prior to the year in which the dividends are  paid, and is not, in the year in which the dividends are paid, a passive foreign investment company (see “Passive  Foreign Investment Company” below). Under current U.S. Treasury Department guidance, our ADSs, which  are listed on the New York Stock Exchange, but not our shares, are treated as readily tradable on an established  securities market in the United States. Thus, we do not believe that dividends that we pay on our shares that are  not backed by ADSs currently meet the conditions required for these reduced tax rates. There can be no assurance  that our ADSs will continue to be readily tradable on an established securities market in later years (or that our  shares will be readily tradable on an established securities market in any given year). Individuals that do not meet  a minimum holding period requirement during which they are not protected from the risk of loss, or that elect to  treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code, will not be eligible  for the reduced rates of taxation regardless of the trading status of our shares or ADSs. In addition, the rate  reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with  respect to positions in substantially similar or related property. This disallowance applies even if the minimum  holding period has been met. You should consult your own tax advisor regarding the application of these rules  given your particular circumstances.  The amount of any dividend paid in NT dollars will equal the U.S. dollar value of the NT dollars you  receive, calculated by reference to the exchange rate in effect on the date you actually or constructively receive  the dividend, which in the case of an ADS will be the date received by the depositary, regardless of whether the  NT dollars are actually converted into U.S. dollars. If the NT dollars received as a dividend are not converted  into U.S. dollars on the date of receipt, you will have a basis in the NT dollars equal to their U.S. dollar value on  the date of receipt. Any gain or loss you realize if you subsequently sell or otherwise dispose of the NT dollars  will be ordinary income or loss from sources within the United States for foreign tax credit limitation purposes.  Subject to certain conditions and limitations under the Code, you may be entitled to a credit or deduction  against your U.S. federal income taxes for the net amount of any Republic of China taxes that are withheld from  dividend distributions made to you. In determining the amounts withheld in respect of Republic of China taxes,  any reduction of the amount withheld on account of a Republic of China credit in respect of the 10% retained  earnings tax imposed on us is not considered a withholding tax and will not be treated as distributed to you or  creditable by you against your U.S. federal income tax. The limitation on foreign taxes eligible for credit is  calculated separately with respect to specific classes of income. For purposes of calculating the foreign tax credit,  dividends we pay with respect to shares or ADSs will generally be considered passive category income from  sources outside the United States. Further, a U.S. holder that  may not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on shares or ADSs. The  rules governing the foreign tax credit are complex. We therefore urge you to consult your tax advisor regarding  the availability of the foreign tax credit under your particular circumstances.  To the extent that the amount of any distribution you receive exceeds our current and accumulated earnings  and profits for a taxable year, as determined under U.S. federal income tax principles, the distribution will first  be treated as a tax-free return of capital, causing a reduction in your adjusted basis in the shares or ADSs and  thereby increasing the amount of gain, or decreasing the amount of loss, you will recognize on a subsequent  disposition of the shares or ADSs. The balance in excess of adjusted basis, if any, will be taxable to you as capital  gain recognized on a sale or exchange. However, we do not expect to keep earnings and profits in accordance  with U.S. federal income tax principles. Therefore, you should expect that a distribution will generally be treated  as a dividend.  • is obligated to make payments related to the dividends,  • has held shares or ADSs for less than a specified minimum period during which it is not protected  from risk of loss, or 