Telecommunications Act Article 12

A Type I telecommunications enterprise may not operate without franchise and license issued by the MOTC.A Type I telecommunications enterprise shall be a company limited by shares incorporated pursuant to the Company Law.The chairman of the Board, of a Type I telecommunications enterprise shall be a nationals of the Republic of China. The total direct shareholding by foreigners may not exceed forty-nine percent, and the sum of direct and indirect shareholding by foreigners may not exceed sixty percent.The percentage of indirect shareholding by foreigners mentioned in the preceding paragraph shall be calculated by multiplying the percentage of shareholding by domestic juristic persons in the Type I telecommunication enterprise by the percentage of shareholding or capital paid by foreigners in the said domestic juristic persons.The percentage of shareholding by foreigners in Chunghwa Telecom Co., Ltd. shall be separately prescribed by the MOTC, and the provision in paragraph three shall not be applied hereto.The operating items and scope, the timetable for deregulation, and the number of operators to be allowed for Type I telecommunications enterprises shall be announced by the Executive Yuan.With respect to granting franchise to Type I telecommunications enterprises' service provisions, the MOTC may adopt a system of evaluation and examination, open tender or any other appropriate method, in consideration of the objectives of liberalization policy, conditions of the telecommunications market, consumers' rights, and other needs of public interests.