The rules governing how many foreigners are allowed on active rosters has varied over time. While the fairness of the rules is a hot topic for debate (on numerous threads), what I want to present to you here is the rules governing roster allowances.
Currently there is no limit to the number an organization can sign. However, only 4 foreign players are allowed on the 25-man game roster, with a maximum of 3 position players or 3 pitchers. There can not be 4 position players or 4 pitchers at one time. 3 position players and 1 pitcher, 1 position player and 3 pitchers, or 2 of each are all possible.
I previously posted that starting in 2006 each team may have one Asian player (a player from Taiwan, Korea, or Mainland China) excluded from the foreign player limit. It turns out that such a rule was never enacted. I apologize for the previous inaccuracy.
The position of player on the roster does not need to be the position he plays on the field. (It is still being looked into whether all four players may enter the game as position players or pitchers.)
If a player listed on the roster as a pitcher enters the line-up as a position player, he is counted as a position player.
A player listed on the roster as a position player may enter the game as a pitcher.
The deadline for signing new foreign players is the same as the trading deadline of June 30th. This was pushed back to July 31 for 2008 for supplementing rosters losing players to the Olympics.
Because they are considered Japanese, of course they are not counted as foreign players.
Taiho signed with the Dragons under the rule that states if a player lives and studies in Japan for five years or more, they are treated as Japanese players. After graduating from college in Japan, Taiho worked for one year at Chunichi as a trainee, and thus was able to sign with Chunichi without using a foreign player spot.
Currently, the rules for foreign players to be treated as Japanese players is as follows:
Since 1997, foreign players who qualify for free agency in Nippon Professional Baseball (NPB) no longer count as foreign players. Only Taigen Kaku (Kuo Tai-yuan) of the Seibu Lions and Tuffy Rhodes of Kintetsu, the Giants, and Orix have qualified under this rule.