TAIPEI (Taiwan News) — TSMC on Tuesday announced that foreign investors registered under Taiwan's overseas-investor regulations will be able to receive cash dividends in US dollars, following recent regulatory changes.
The new option will apply to the distribution of TSMC’s second-quarter dividend. Market observers said companies that have raised money overseas or have a large base of foreign shareholders are expected to be among those most likely to consider paying dividends in foreign currencies, according to CTEE and Sinotrade.
Companies can return part of their profits to shareholders through cash dividends, which may be paid annually, semiannually, or quarterly. Paying dividends directly in US dollars would eliminate the need for foreign investors to convert Taiwan dollars, reducing transaction costs and currency exchange volatility.
Foreign investors held a 69.16% stake in TSMC as of Tuesday, making the chipmaker a major test case for the new payment option. Based on its NT$7-per-share dividend for the second quarter, TSMC is set to distribute about NT$181.5 billion (US$5.6 billion).
Central Bank Foreign Exchange Department Director Tsai Chiung-min (蔡烱民) said TSMC could play an important role in introducing US-dollar dividend payments in the country. He said the move could make local stocks more attractive to foreign investors and help further open up the domestic capital market to international investors.
The Financial Supervisory Commission said it recently issued the directive as the stock market has grown into one of the world’s largest by market capitalization. The change is intended to support market internationalization and provide a more convenient investment environment for foreign investors.
Taiwan Stock Exchange data shows that 49 listed companies in Taiwan, including heavyweights Foxconn and ASE, have issued depositary receipts overseas, which allows investors abroad to hold their shares through financial instruments traded outside Taiwan. Another 84 listed and over-the-counter companies have foreign investors holding more than half of their shares.
