PART I In addition to the general restrictions against direct investment by non-Taiwan persons in Taiwan  companies, non-Taiwan persons are currently prohibited from investing in prohibited industries in Taiwan  under the Negative List promulgated by the Executive Yuan from time to time. The prohibition on direct foreign  investment in the prohibited industries in the Negative List is absolute with the consequence of certain specific  exemption from the application of the Negative List. Under the Negative List, some other industries are restricted  so that non-Taiwan persons may directly invest only up to a specified level and with the specific approval of  the relevant authority which is responsible for enforcing the legislation which the negative list is intended to  implement. The telecommunication industry is a restricted industry under the Negative List.  In April 1992, the Securities and Futures Bureau began allowing Taiwan companies listed on the Taiwan  Stock Exchange, with the prior approval of the Securities and Futures Bureau, to sponsor the issuance and sale of  depositary receipts evidencing depositary shares. In December 1994, the Republic of China Ministry of Finance  began allowing companies whose shares are traded on the GreTai Securities Market also to sponsor the issuance  and sale of depositary receipts evidencing depositary shares representing shares of its capital stock. Approvals  for these issuances are still required.  After the issuance of a depositary share, a holder of the depositary receipt evidencing the depositary shares  may request the depositary issuing the depositary share to cause the underlying shares to be sold in Taiwan and  to distribute the proceeds of the sale to or to withdraw the shares and deliver the shares to the depositary receipt  holder. A citizen of the People’s Republic of China is not permitted to withdraw and hold our shares.  If you are an offshore foreign institutional investor holding the depositary receipts, you must register with  the Taiwan Stock Exchange as a foreign investor before you will be permitted to withdraw the shares represented  by the depositary receipts. In addition to obtaining registration with the Taiwan Stock Exchange, you must also  (i) appoint a qualified local agent to, among other things, open a securities trading account with a local securities  brokerage firm and a bank account to remit funds, exercise stockholders’ rights and perform other functions as  holders of ADSs may designate, (ii) appoint a custodian bank to hold the securities and cash proceeds, confirm  transactions, settle trades and report and declare other relevant information and; (iii) appoint a tax guarantor  as guarantor for the full compliance of the withdrawing depositary receipt holders’ tax filing and payment  obligations in the Republic of China. A depositary receipt holder not registered as a foreign investor with the  Taiwan Stock Exchange, or not has made the necessary appointments as outlined above, will be unable to hold or  subsequently transfer the shares withdrawn from the depositary receipt facility.  No deposits of shares may be made in a depositary receipt facility and no depositary shares may be issued  against deposits without specific Securities and Futures Bureau approval, unless they are:  (i)  stock dividends;  (ii) free distributions of shares;  (iii) due to the exercise by the depositary receipt holder preemptive rights in the event of capital increases  for cash; or  (iv) if permitted under the deposit agreement and custody agreement and within the amount of depositary  receipts which have been withdrawn, due to the direct purchase by investors or purchase through the  depositary on the Taiwan Stock Exchange or the GreTai Securities Market or delivery by investors of  the shares for deposit in the depositary receipt facility. In this event, the total number of depositary  receipts outstanding after an issuance cannot exceed the number of issued depositary receipts  previously approved by the Securities and Futures Bureau of the Financial Supervisory Commission  in connection with the offering plus any ADSs issued pursuant to the events described in (i), (ii) and  (iii) above.  111 Depositary Receipts 