The Financial Supervisory Commission of Taiwan (FSC) revised the “Regulations Governing Securities Investment by Overseas Chinese and Foreign Nationals” at the end of April, allowing listed and over-the-counter companies to distribute U.S.-dollar-denominated cash dividends to foreign shareholders. The market calls it the “TSMC provision.” The system is expected to be completed in the third quarter, with the dividend payout season officially beginning in 2027.
What the TSMC provision entails: FSC revised rules in April, officially implemented in the 2027 dividend season
According to an FSC announcement, the legal basis for the “TSMC provision” is the regulation revised at the end of April this year. After the revision, listed and over-the-counter companies may distribute U.S.-dollar-denominated cash dividends to foreign shareholders. The system is expected to be completed in the third quarter, and the 2027 dividend season will officially commence.
Electronics giants that frequently receive and pay in dollars, such as United Microelectronics (2303), also expressed a positive view: with dollars coming in and going out, cash management and hedging costs can be reduced through a single process. Domestic shareholders are unaffected and continue to receive dividends denominated in Taiwan dollars; this measure applies only to foreign shareholders, and retail investors will not notice any change.
How the mechanism reduces two rounds of FX conversion: Yang Chin-lung explains the structural issue of FX friction in foreign dividends
According to remarks by the Central Bank governor, Yang Chin-lung, in the Legislative Yuan, the current system’s problem is that if a listed company wants to distribute dividends denominated in Taiwan dollars, it must first sell its dollar income and convert it into Taiwan dollars. If foreign shareholders then decide to remit the dividends abroad, they have to buy back dollars—creating “two rounds of FX conversion.” Each round exerts buy-sell pressure on the FX market and can easily amplify exchange-rate volatility, especially when conversions are concentrated during the dividend payout season.
If dividends were distributed directly in dollars, in theory, the “sell first, then buy back” step could be skipped, reducing friction caused by currency conversions. Moving the timing and participants of conversion from the public market to the company and foreign investors would make operations cleaner and more efficient.
Three major limitations of the TSMC provision: eligible parties, scale of beneficiaries, and uncertainty around foreign investors’ remittance behavior
Based on Yang Chin-lung’s remarks and analysis, the measure has three main limitations:
Limited eligible parties: It applies only to foreign shareholders; domestic shareholders continue to receive Taiwan-dollar dividends. The companies that truly benefit are concentrated among a small number of large-cap stocks with very high foreign ownership (represented by TSMC, with 72% foreign shareholding). For most listed and over-the-counter companies, the dividend structure does not need to be changed.
Concentrated benefit scale: Most listed and over-the-counter companies do not have the conditions or necessity to implement this, so the overall FX-market stress reduction effect is limited.
Uncertainty in foreign remittance behavior: Foreign investors receiving dividend payments do not necessarily remit immediately. They may reallocate funds back into the stock market depending on their investment strategy, which is unrelated to the currency in which dividends are paid.
Yang Chin-lung uses the “willow theory” to describe the central bank’s intervention principle: The central bank allows exchange rates to fluctuate moderately and steps in when necessary to adjust. However, dollar dividends can only “trim” seasonal strong winds, while the underlying reasons for the weakness of the New Taiwan dollar (the Taiwan–U.S. interest rate differential, global capital flows, and Taiwan’s FX demand in the capital market) are currently not addressed by any direct tools the central bank can deploy to counteract this measure.
Common Questions
When will the TSMC provision officially take effect, and which companies will it apply to?
According to the FSC announcement, the “TSMC provision” is expected to complete system buildout in the third quarter and officially start in the 2027 dividend season. It applies to listed and over-the-counter companies that intend to distribute U.S.-dollar-denominated cash dividends to foreign shareholders, with the main beneficiaries being high-foreign-ownership stocks (such as TSMC, UMC, etc.); domestic shareholders are unaffected.
Can this measure “save the Taiwan dollar” or significantly stabilize the exchange rate?
According to remarks by the central bank governor, Yang Chin-lung, the original statement is that this measure “should help stabilize the exchange rate.” He clearly indicates the purpose is to reduce FX-conversion volatility during the dividend season, not to reverse the long-term trend of the New Taiwan dollar. Yang Chin-lung uses the “willow theory” to describe the central bank’s stance: it allows moderate fluctuations, and dollar dividends at most reduce seasonal FX conversion pressure; the factors driving the New Taiwan dollar’s long-term trend (the Taiwan–U.S. interest rate differential and global capital flows) are outside the scope of this measure.
What is TSMC’s foreign ownership share, and why is this measure named after it?
According to reports, TSMC’s foreign ownership is about 72%. In 2026, its single dividend payout size will reach around NT$1 trillion, making it one of the stocks with the highest concentration of foreign investors’ FX-conversion pressure in Taiwan. Foreign investors hold nearly $50 billion worth of Taiwan stocks. Because TSMC’s scale and foreign ownership characteristics align most closely with the eligibility criteria for this measure, the market refers to this regulatory revision as the “TSMC provision.”
