SecProbe.io

CORRESP
1
filename1.htm

Response Letter to SEC dated July 29, 2005

 July 29, 2005

Re:
Chunghwa Telecom Co., Ltd.

Registration Statement on Form F-3

Filed July 6, 2005

File No. 333-126417

 Mr. Larry Spirgel

 Assistant Director

 Mr. Ted Yu

 Staff Attorney

 Division of Corporation
Finance

 Securities and Exchange Commission

 100 F Street, N.E.

 Washington, D.C. 20549

 Mail Stop 0407

 Dear Mr. Spirgel and Mr. Yu:

 We refer to our letter of July 28, 2005, responding on behalf of Chunghwa Telecom Co., Ltd. (the “Company”), to
your comment letter dated July 27, 2005 with respect to the Company’s Registration Statement on Form F-3 (the “Registration Statement”) filed with the Securities and Exchange Commission (the “Commission”) on July 6, 2005.

 In response to the Staff’s comment number 5 and in order
to update the disclosure, the Company revised in Amendment No. 1 to the Registration Statement filed on July 28, 2005, the first risk factor on page 7 of the prospectus concerning the petition by certain legislators to the Grand Justices of the
Republic of China to stop the Company’s privatization.

 SIMPSON THACHER & BARTLETT LLP

 2

 The Company would like to inform the Staff that the Grand Justices have dismissed that petition today on both procedural and substantive grounds as
follows: (i) the petition did not meet the sufficient legislator quorum for a Grand Justices’ review, and (ii) the sale of the Company’s shares is an administrative action that is not the subject of a constitutional review by the Grand
Justices. The Company has been advised by its Republic of China counsel that the dismissal by the Grand Justices represents the final decision of the Grand Justices on the petition filed by the legislators on July 15, 2005. An English translation of
the decision of the Grand Justices is provided supplementally as Annex A to this letter.

 The Company proposes to revise the Registration Statement to reflect these and other developments. The Company will also add additional disclosure in response to the Staff’s comment number 16. Attached as Annex B
are marked changed pages of the prospectus showing these revisions, which will be included in the next amendment filing of the Registration Statement.

 If you have any questions or comments, please do not hesitate to contact me (telephone: 011-852-2514-7650, e-mail: clin@stblaw.com, fax:
011-852-2869-7694), Eugene Lee (telephone: 011-852-2514-7690, e-mail: elee@stblaw.com, fax: 011-852-2869-7694) or Gene Buttrill (telephone: 011-852-2514-7655, e-mail: ebuttrill@stblaw.com, fax: 011-852-2869-7694) of our firm.

 Very truly yours,

 /s/ Chris Lin

 Chris Lin

 Enclosures

cc:
Mr. Hank Han-Chao Wang

Chunghwa Telecom Co., Ltd.

Ms. Hwa-Mei Wei

Chunghwa Telecom Co., Ltd.

William Y. Chua, Esq.

Sullivan & Cromwell LLP

 ANNEX A

 ENGLISH TRANSLATION OF GRAND JUSTICES’ DECISION

 Subject: With
respect to the petition for Judicial Yuan interpretation filed by one hundred Legislators including Legislator Tsai Ching-Lung in connection with the confrontation between the resolutions passed by the Legislative Yuan regarding the limitation and
instruction on share disposal structure and the administrative actions taken by the Ministry of Transportation and Communications (“MOTC”) executing its budget and directing Chunghwa Telecom Co., Ltd. (the “Company”) to conduct
overseas share disposal that resulted in a dispute on the application of Article 63 of the Constitution; and that Article 13 of the Statute Governing Privatization of State-Owned Enterprises (“Privatization Law”), Article 8 of the
Implementation Rules of the Privatization Law (“Implementation Rules”) and the administrative actions of the MOTC directing the Company to execute the annual budget of central government for the year of 2000 and 2001 which is in violation
of the Constitution.

 Hui-Tai-Tzu No. 7817

 It is resolved that:

 Item 3, Paragraph I of Article 5 of the Law Governing Case Review by Grand Justices of Judicial Yuan (the “Law”) provides that when a
dispute arises from the application of Constitution as the Legislators perform their duties, one-third or more of the Legislators may petition for Judicial Yuan Interpretation. Item 1, Paragraph I of Article 7 of the Law provides that when the view
held by a central or local government agency on the application of laws and regulations is different from that of another government agency when performing their duties, the government agency may petition for uniform interpretation.

 The petitioners of this petition alleged that a confrontation arises between the resolutions passed by
the Legislative Yuan regarding the limitation and instruction on share disposal structure and the administrative actions taken by the MOTC when executing its budget and directing the Company to conduct overseas share disposal that resulted in a
dispute on the application of Article 63 of the Constitution; furthermore, that Article 13 of the Privatization Law, Article 8 of the Implementation Rules and the administrative actions by the MOTC directing the Company to execute the annual budget
of central government of the Republic of China for the year of 2000 and 2001 which is in violation of Article 63 of the Constitution, then petitioned for Judicial Yuan Interpretation in accordance with Item 3, Paragraph I of Article 5 of the Law.
The petitioners further alleged that the view held by the Legislative Yuan on the application of Article 72 of the Budget Law is different from that of the MOTC, Executive Yuan and jointly petitioned for a uniform interpretation. However:

1.
For the part the petitioners alleging that a confrontation arises between the resolutions passed by the Legislative Yuan regarding the limitation and instruction on share disposal structure
and the administrative actions taken by the MOTC when executing its budget and directing the Company to conduct overseas share disposal that resulted in a dispute on the application of Article 63 of the Constitution, supervision over the execution
of legal budget is the power and duty of the Legislative Yuan, which is stipulated in the Judicial Yuan Interpretation No.520. The Legislative Yuan shall resolve in the Yuan meeting when performing its power and duty of supervising the execution of
legal budget. The allegation by the petitioners that the confrontation between the resolutions passed by the Legislative Yuan regarding the limitation and instruction on share disposal structure and the administrative actions taken by the MOTC when
executing its budget and directing the Company to conduct overseas share disposal that resulted in a dispute on the application of Article 63 of the Constitution shall be categorized as a dispute on the application of Constitution by the Legislative
Yuan and the Executive Yuan when performing their respective duties, not a dispute on the application of Constitution or the application of laws which is in violation of Constitution when the Legislators perform their duties that one-third or more
of the Legislators may petition for Judicial Yuan Interpretation. Therefore, the petition by the petitioners according to Item 3, Paragraph I of Article 5 of the Law is not in line with the law.

2.
For the part that the petitioners alleging that Article 13 of the Privatization Law is in violation of the Constitution, it is understood that one-third or more of the Legislators may
petition for Judicial Yuan Interpretation in accordance with Item 3, Paragraph I of Article 5 of the Law on the disputes on the application of law which is in violation of Constitution when the Legislators perform their duties. The legislative
intention for such article is to protect minority by enabling the minority Legislators, who firmly believe that a statutory bill passed by a majority of Legislators and promulgated by the President is in violation of Constitution, may petition for
Judicial Yuan Interpretation to safeguard the order of Constitution. The said Article 13 of the Privatization Law in dispute was amended and promulgated on November 29, 2000, given the petitioners are not the then Legislators who passed the said
law, if the petitioner firmly believe that the said law in dispute is in violation of Constitution, the petitioners may file the petition only after they have exercised their Constitutional power to amend the said law in dispute but failed. A
petition in such matter would be in line with the legislative intention of Item 3, Paragraph I of Article 5 of the Law. However, we found that no amendment of the said law in dispute was proposed to the Legislative Yuan at the time when the petition
was filed; therefore, the said part of the petition by the petitioners is not in line with the above-mentioned and shall be dismissed.

3.
For the part that the petitioners alleging that Article 8 of the Implementation Rules violates the Constitution, pursuant to Item 3, Paragraph I of Article 5 of the Law, only the dissenting
legislators who hold negative view of Constitutionality when the Legislative Yuan reviews whether the implementation rules of a law violate, amend or contradict the law or regulate a matter with an order while such matter should be regulated by law,
in each case pursuant to Article 60 of the Law Governing the Power Exercise of Legislative Yuan would file a petition for the Judicial Yuan Interpretation. The petitioners are not the then legislators who reviewed the Implementation Rules. If the
petitioners firmly believe that the Implementation Rules violate the Constitution, they should request a re-examination by applying the rules for law review pursuant to Article 63 of the Law Governing the Power Exercise of Legislative Yuan and a
petition can be filed if such request is denied. A petition in such manner would be in line with Item 3, Paragraph I of Article 5 of the Law. The petitioners did not request a re-examination on the Implementation Rules and therefore the related part
of the petition is not legitimate.

4.
The petitioners alleges that it is a violation of Article 63 of the Constitution for the administrative action by the MOTC to direct the Company to execute annual budget of central government
for the year of 2000 and 2001. According to the Law, the Judicial Yuan only has the right to review the Constitutionality of laws and regulations, which are abstract in nature. As the administrative action is not the subject that the Judicial Yuan
shall review. Therefore, this part of the application is not in line with the law.

5.
When a central government agency petitions for uniform interpretation because its view for the application of a law when performing its duty contradicts with the view held by the other
agency, only the agency itself may make such petition pursuant to Item 1, Paragraph I of Article 7 of the Law. Therefore, the petition for uniform interpretation alleging that the Legislative Yuan applying Article 72 of Budget Law in a different
manner as the MOTC, Executive Yuan is not in line with Item 1, Paragraph I of Article 7 of the Law.

6.
To sum up, this petition should be dismissed in accordance with Paragraph III of Article 5 and Paragraph III of Article 7 of the Law.

 Given a determination is made to dismiss this petition, it is not necessary to consider the petition for temporary order and such petition should be rejected accordingly.

 ANNEX B

 CHANGED PAGES OF PROSPECTUS

The Offering

 Unless otherwise indicated, the
information in this prospectus assumes that the underwriters do not exercise the option granted by the Ministry of Transportation and Communications to purchase up to 9,647,776 additional ADSs. Please see “Underwriting.”

 Offering price

 US$                     per ADS

 Selling Shareholder

 The Ministry of Transportation and Communications of the Republic of China

 ADSs offered

 125,420,424 ADSs

 Option to purchase additional ADSs

 The selling shareholder has granted to the underwriters an option, exercisable within four days after the date of this prospectus, to purchase up to
9,647,776 additional ADSs at the public offering price less the underwriting discount.

 ADSs outstanding after this offering

 236,395,123 ADSs

 ADSs

 Each ADS represents the right to receive ten common shares, par value NT$10 per share. The ADSs are evidenced by American depositary receipts, or ADRs,
issued by the depositary.

 Common shares outstanding prior to and after this offering

 9,647,724,900 common shares

 Concurrent public auction within the Republic of China

 Concurrently with this offering, the selling shareholder is separately offering up to 289,431,000 common shares in a public after-hour auction to be
conducted on the Taiwan Stock Exchange solely within the Republic of China. The base price will be announced after the bids have been submitted. The common shares to be sold at the public auction may be sold at a discount of up to 8.0% below the
prevailing price of our common shares on the Taiwan Stock Exchange.

 Trading market for our common shares

 The only trading market for our common shares is in Taiwan. Our common shares have been listed on the Taiwan Stock Exchange since October 27, 2000 under the
number “2412.”

 New York Stock Exchange symbol for the ADSs

 “CHT”

 Use of proceeds

 We will not receive any proceeds from this offering or the concurrent public auction of our common shares within the Republic of China.

 4

 Depositary

 The Bank of New York

 Risk Factors

 See “Risk Factors” and the other information contained or incorporated by reference into this prospectus before deciding to invest in our ADSs. In
particular, prospective investors should be aware of the considerations discussed under the heading “Risk Factors — We face opposition to our privatization, and this offering may be subject to legal or other challenges.” A valid
injunction or other legal proceeding could require or make it advisable for this offering to be halted before completion or for settlement and delivery of the ADSs offered hereby not to take place. Consequently, prospective investors that engage in
market trading or other activities in anticipation of and prior to settlement and delivery do so at the risk that settlement and delivery may not occur.

 4.1

RISK FACTORS

 You should carefully
consider the risks described below and the other information contained or incorporated by reference in this prospectus before deciding to invest in our ADSs.

 Risks Relating to This Offering

 We face opposition to our privatization, and this offering may be subject to legal or other challenges.

  Certain interested groups in the Republic of China have expressed their opposition to this offering and to our privatization
generally. In particular, our labor union held a strike on May 17, 2005 in anticipation of this offering. Our labor union may take further action to disrupt this offering, including commencing legal or other actions in relation to this offering.
Moreover, the Legislative Yuan of the Republic of China passed a resolution on May 30, 2003 that prohibited the selling of our common shares or the increasing of our share capital through negotiated transactions, and that required us to hold ten
offers to the general public in Taiwan before we may conduct any sales of our common shares through open tender, which we believe refers to the process through which the Ministry of Transportation and Communications selects a winning bidder with
whom it enters into a negotiated sale of our shares. The Legislative Yuan passed another resolution on June 10, 2004 that required the government to postpone selling our common shares until after we reach collective agreement with our labor union on
employee benefit issues. Furthermore, on May 27, 2005, the Legislative Yuan passed a resolution that required us to cease all activities relating to the sale of our common shares. On the same day, the Legislative Yuan passed another resolution
stipulating th