
[Federal Register: February 25, 2008 (Volume 73, Number 37)]
[Proposed Rules]               
[Page 10101-10122]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25fe08-19]                         


[[Page 10101]]

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Part II





Securities and Exchange Commission





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17 CFR Parts 239, 240 and 249



Exemption From Registration Under Section 12(g) of the Securities 
Exchange Act of 1934 for Foreign Private Issuers; Proposed Rule


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 239, 240 and 249

[Release No. 34-57350; International Series Release No. 1307; File No. 
S7-04-08]
RIN 3235-AK04

 
Exemption From Registration Under Section 12(G) of the Securities 
Exchange Act of 1934 for Foreign Private Issuers

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: We are proposing amendments to the rule that exempts a foreign 
private issuer from having to register a class of equity securities 
under Section 12(g) of the Securities Exchange Act of 1934 (``Exchange 
Act'') based on the submission to the Commission of certain information 
published outside the United States. The exemption allows a foreign 
private issuer to exceed the registration thresholds of Section 12(g) 
and effectively have its equity securities traded on a limited basis in 
the over-the-counter market in the United States. Currently, in order 
to obtain the exemption under Exchange Act Rule 12g3-2(b), a non-
reporting foreign private issuer must submit to the Commission written 
materials in paper, including a list of information that the issuer 
must disclose publicly pursuant to its home jurisdiction laws or stock 
exchange requirements, or that is sent to its security holders, along 
with paper copies of documents containing the required information that 
the issuer has published for its last fiscal year. A successful 
applicant may maintain the exemption by submitting to the Commission 
paper copies of these documents on an ongoing basis. The proposed 
amendments would eliminate paper submission requirements by 
automatically granting the Rule 12g3-2(b) exemption to a foreign 
private issuer that meets specified conditions, which do not depend on 
a count of an issuer's United States security holders, and which would 
require an issuer to publish electronically in English specified non-
United States disclosure documents. As a result, the proposed 
amendments should make it easier for U.S. investors to gain access to a 
foreign private issuer's material non-United States disclosure 
documents and make better informed decisions regarding whether to 
invest in that issuer's equity securities through the over-the-counter 
market in the United States or otherwise.

DATES: Comments must be received on or before April 25, 2008.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/proposed.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number S7-04-08 on the subject line; or
     Use the Federal eRulemaking Portal (http://
www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number S7-04-08. This file number 
should be included on the subject line if e-mail is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments 
also are available for public inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. All comments received will be posted without change; we do not 
edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Elliot Staffin, Special Counsel, at 
(202) 551-3450, in the Office of International Corporate Finance, 
Division of Corporation Finance, U.S. Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-3628.

SUPPLEMENTARY INFORMATION: We propose to amend Commission Rules 12g3-2 
\1\ and 15c2-11 \2\ under the Exchange Act,\3\ Forms 15,\4\ 15F,\5\ 40-
F,\6\ and 6-K \7\ under the Exchange Act, and Form F-6 \8\ under the 
Securities Act of 1933 (``Securities Act'').\9\
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    \1\ 17 CFR 240.12g3-2.
    \2\ 17 CFR 240.15c2-11.
    \3\ 15 U.S.C. 78a, et seq.
    \4\ 17 CFR 249.323.
    \5\ 17 CFR 249.324.
    \6\ 17 CFR 249.240f.
    \7\ 17 CFR 249.306.
    \8\ 17 CFR 239.36.
    \9\ 15 U.S.C. 77a, et seq.
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Table of Contents

I. Executive Summary and Background
    A. Introduction
    B. Current Rule 12g3-2(b) Requirements
    C. Proposed Rule 12g3-2 Amendments
II. Discussion
    A. Proposed Non-Reporting Condition
    1. Non-Reporting Issuers
    2. Deregistered Issuers
    B. Proposed Foreign Listing Condition
    C. Proposed Quantitative Standard
    1. Trading Volume Benchmark
    2. Rule 12h-6 Issuers
    D. Proposed Electronic Publishing of Non-U.S. Disclosure 
Documents
    1. Electronic Publishing Requirement to Claim Exemption
    2. Electronic Publishing Requirement to Maintain Exemption
    E. Proposed Elimination of the Written Application Requirement
    F. Proposed Duration of the Amended Rule 12g3-2(b) Exemption
    G. Proposed Elimination of the Successor Issuer Prohibition
    H. Proposed Elimination of the Rule 12g3-2(b) Exception for MJDS 
Filers
    I. Proposed Elimination of the ``Automated Inter-Dealer 
Quotation System'' Prohibition and Related Grandfathering Provision
    J. Proposed Revisions to Form F-6
    K. Proposed Amendment of Exchange Act Rule 15c2-11
    L. Proposed Transition Periods
    1. Regarding Section 12 Registration
    2. Regarding Processing of Paper Submissions
    M. Revisions to Form 15
III. Paperwork Reduction Act Analysis
IV. Cost-Benefit Analysis
V. Consideration of Impact on the Economy, Burden on Competition and 
Promotion of Efficiency, Competition and Capital Formation Analysis
VI. Regulatory Flexibility Act Certification
VII. Statutory Basis and Text of Proposed Amendments

I. Executive Summary and Background

A. Introduction

    Congress adopted Section 12(g) of the Exchange Act \10\ in order to 
provide investors trading in over-the-counter securities, in which 
there was significant public interest, with the same fundamental 
disclosure protections afforded to investors trading in securities 
listed on a national securities exchange.\11\ When read in conjunction 
with the subsequently adopted Exchange Act Rule 12g-1,\12\

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Section 12(g) requires an issuer \13\ to file an Exchange Act 
registration statement regarding a class of equity securities within 
120 days of the last day of its fiscal year if, on that date, the 
number of its record holders is 500 or greater, and the issuer's total 
assets exceed $10 million.\14\
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    \10\ 15 U.S.C. 78l(g).
    \11\ Congress adopted Exchange Act Section 12(g) as part of the 
Securities Act Amendments of 1964 [Pub. L. 88-467 (August 20, 
1964)]. See the 88th Congress, 2d Session, U.S. House of 
Representatives Report No. 1418 (May 19, 1964).
    \12\ 17 CFR 240.12g-1.
    \13\ Application of Section 12(g) requires that the issuer have 
the necessary jurisdictional nexus with interstate commerce in the 
United States. 15 U.S.C. 78l(g)(1).
    \14\ Through successive amendments of Rule 12g-1, the Commission 
raised the statutory asset threshold from an amount exceeding 
$1,000,000 to an amount exceeding $10,000,000.
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    When adopting Section 12(g), Congress expressly granted the 
Commission the power to exempt any security of a foreign issuer from 
that section if it found that ``such exemption is in the public 
interest and is consistent with the protection of investors.'' \15\ The 
Commission initially adopted a provisional exemption from Section 12(g) 
for the securities issued by any foreign government, foreign national 
or foreign corporation so that it could study more fully the extent to 
which Section 12(g) should apply to foreign securities.\16\ This 
initiative involved a review of the disclosure requirements and 
practices of many of the foreign countries with issuers whose 
securities were traded in the United States over-the-counter 
market.\17\
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    \15\ Exchange Act Section 12(g)(3) [15 U.S.C. 78l(g)(3)]. In an 
earlier draft of the 1964 amendments, the U.S. Senate justified an 
exemptive provision for the securities of foreign issuers based on 
the serious difficulties that would result from the enforcement of 
Exchange Act Section 12(g)'s registration and reporting requirements 
``against foreign issuers outside the jurisdiction of the United 
States who do not voluntarily seek funds in the American capital 
markets or listing on an exchange. * * *'' 88th Congress, 1st 
Session, U.S. Senate Report No. 379 1, 29 (July 24, 1963).
    \16\ Release No. 34-7427 (September 15, 1964). At that time, 
while expressing its belief that, to the extent practicable, U.S. 
investors in foreign securities should be afforded the same investor 
protections to which U.S. investors in domestic securities are 
entitled, the Commission also recognized the practical problems ``of 
enforcement and compliance and of differing foreign laws'' raised by 
the application of Section 12(g) to foreign companies.
    \17\ See Release No. 34-7746 (November 16, 1965).
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    Following completion of its work, in 1967 the Commission adopted 
Exchange Act Rule 12g3-2,\18\ which established two exemptions from 
Section 12(g) for foreign private issuers.\19\ Exchange Act Rule 12g3-
2(a) exempts a foreign private issuer whose equity securities are held 
of record by less than 300 residents in the United States, although it 
has 500 or more record holders on a worldwide basis as of the end of 
its most recently completed fiscal year.\20\ An issuer that relies on 
this exemption must reassess the number of its U.S. shareholders at the 
end of each fiscal year in order to determine whether the exemption 
remains valid.
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    \18\ Release No. 34-8066 (April 28, 1967).
    \19\ As defined in Rule 3b-4(c) (17 CFR 240.3b-4(c)), a foreign 
private issuer is a corporation or other organization incorporated 
or organized in a foreign country that either has 50 percent or less 
of its outstanding voting securities held of record by United States 
residents or, if more than 50 percent of its voting securities are 
held by U.S. residents, about which none of the following are true:
    (1) A majority of its executive officers or directors are U.S. 
citizens or residents;
    (2) more than 50 percent of its assets are located in the United 
States; and
    (3) the issuer's business is administered principally in the 
United States.
    \20\ 17 CFR 240.12g3-2(a).
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    Although, for this first exemption, the Commission used a 
traditional shareholder test to determine whether there was sufficient 
U.S. investor interest to warrant requiring Section 12(g) 
registration,\21\ it adopted a different approach for the second 
exemption. Exchange Act Rule 12g3-2(b)\22\ exempts a foreign private 
issuer from Section 12(g) registration if, among other requirements, 
the issuer furnishes to the Commission on an ongoing basis information 
it has made public or is required to make public under the laws of its 
jurisdiction of incorporation, organization or domicile, pursuant to 
its non-U.S. stock exchange filing requirements, or that it has 
distributed or is required to distribute to its security holders 
(collectively, its ``non-U.S. disclosure documents'').\23\ The 
Commission adopted this exemption because there was improvement in the 
reporting of financial information by foreign issuers, due to changes 
in foreign corporate laws, stock exchange requirements, and voluntary 
disclosure by the foreign companies themselves.\24\ Because of the 
continued and expected improvement in the quality of information being 
made public by foreign issuers, the Commission determined that Section 
12(g) exemptive relief was appropriate for a foreign private issuer 
that has not sought a public market in the United States for its equity 
securities, and that furnishes to the Commission its non-U.S. 
disclosure documents.\25\ These documents would then be available for 
review by U.S. investors through the Commission's public reference 
facilities.
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    \21\ The Commission reasoned that having fewer than 300 U.S. 
shareholders evidenced such an insufficient public interest that it 
could not justify applying Section 12(g) although a foreign private 
issuer may have breached the statutory threshold. The Commission 
further relied on Exchange Act Section 12(g)(4) [15 U.S.C. 
78l(g)(4)], which provides that an issuer may file a certification 
with the Commission to terminate its registration when its record 
holders have fallen below 300. Release No. 34-7746.
    \22\ 17 CFR 240.12g3-2(b).
    \23\ Exchange Act Rule 12g3-2(b)(1)(iii) (17 CFR 240.12g3-
2(b)(iii)).
    \24\ Release No. 34-8066.
    \25\ Id.
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B. Current Rule 12g3-2(b) Requirements

    As a condition to obtaining the Exchange Act Rule 12g3-2(b) 
exemption, an issuer must initially submit to the Commission a list of 
its non-U.S. disclosure requirements as well as copies of its non-U.S. 
disclosure documents published since the beginning of its last fiscal 
year.\26\ The Rule clarifies that an issuer need only submit copies of 
information that is material to an investment decision for the purpose 
of obtaining or maintaining the exemption.\27\ As examples of material 
information, the Rule lists an issuer's financial condition or results 
of operations, changes in its business, the acquisition or disposition 
of assets, the issuance, redemption or acquisition of securities, 
changes in management or control, the granting of options or other 
payment to directors or officers, and transactions with directors, 
officers or principal security holders. At the time of the initial 
submission, an issuer must also provide the Commission with the number 
of U.S. holders of its equity securities and the percentage held by 
them, as well as a brief description of how its U.S. holders acquired 
those shares.\28\
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    \26\ Exchange Act Rule 12g3-2(b)(1)(i) (17 CFR 240.12g3-
2(b)(1)(i)). Historically, an issuer has submitted its home 
jurisdiction materials as part of a letter application to the 
Commission, which has been processed through the Office of 
International Corporate Finance in the Division of Corporation 
Finance.
    \27\ Exchange Act Rule 12g3-2(b)(3) (17 CFR 240.12g3-2(b)(3)).
    \28\ Exchange Act Rule 12g3-2(b)(1)(v) (17 CFR 240.12g3-
2(b)(1)(v)). An issuer must also disclose the dates and 
circumstances of the most recent public distribution of securities 
by the issuer or an affiliate.
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    Rule 12g3-2(b) currently requires that an applicant submit all of 
the necessary non-U.S. disclosure documents and other information 
before the date that a registration statement would otherwise become 
due under Section 12(g).\29\ Once an issuer has timely submitted its 
application and obtained the exemption, the issuer may surpass the 
record holder thresholds as long as it maintains the exemption by 
submitting the required non-U.S. documents.
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    \29\ Exchange Act Rule 12g3-2(b)(2) (17 CFR 240.12g3-2(b)(2)).
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    From its inception, the Rule 12g3-2(b) disclosure regime has 
mandated paper submissions. Even after the adoption of EDGAR filing 
rules for foreign private issuers, the Commission has required a 
foreign private issuer to submit its

[[Page 10104]]

initial Rule 12g3-2(b) supporting materials in paper.\30\ The 
Commission has based this treatment of Rule 12g3-2(b) materials on the 
analogous treatment of applications for an exemption from Exchange Act 
reporting obligations filed pursuant to Exchange Act Section 12(h).\31\
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    \30\ See Release No. 33-8099 (May 14, 2002), 67 FR 36678 (May 
24, 2002).
    \31\ 15 U.S.C. 78l(h). We require the filing of Section 12(h) 
exemptive applications in paper pursuant to Regulation S-T Rule 
101(c)(16) (17 CFR 232.101(c)(16)).
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    Once a foreign private issuer has obtained the Rule 12g3-2(b) 
exemption, it may have its equity securities traded on a limited basis 
in the over-the-counter market in the United States. Typically a 
foreign private issuer obtains the Rule 12g3-2(b) exemption in order to 
have established an unlisted, sponsored or unsponsored depositary 
facility for its American Depositary Receipts (``ADRs'').\32\ 
Establishing the Rule 12g3-2(b) exemption also facilitates resales of 
an issuer's securities to qualified institutional buyers (``QIBs'') 
under Rule 144A.\33\ It further permits registered broker-dealers to 
fulfill their current information delivery obligations concerning 
foreign private issuers' securities for which they seek to publish 
quotations.\34\
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    \32\ An ADR is a negotiable instrument that represents an 
ownership interest in a specified number of securities, which the 
securities holder has deposited with a designated bank depositary. 
The filing of Securities Act Form F-6 (17 CFR 239.36) is required in 
order to establish an ADR facility. The eligibility criteria for the 
use of Form F-6 include the requirement that the issuer of the 
deposited securities have a reporting obligation under Exchange Act 
section 13(a) or have established the exemption under Rule 12g3-
2(b). See General Instruction I.A.3 of Form F-6. While required to 
be registered on Form F-6 under the Securities Act, ADRs are exempt 
from registration under Exchange Act Section 12(g) pursuant to 
Exchange Act Rule 12g3-2(c) (17 CFR 240.12g3-2(c)).
    \33\ See Securities Act Rule 144A(d)(4) (17 CFR 230.144A(d)(4)).
    \34\ Brokers currently can comply with their obligations under 
Exchange Act Rule 15c2-11 (17 CFR 240.15c2-11) when a foreign 
company has established and maintains the Rule 12g3-2(b) exemption 
by, in part, reviewing the information furnished to the Commission 
under the exemption. See Rule 15c2-11(a)(4) (17 CFR 240.15c2-
11(a)(4)).
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    The Rule 12g3-2(b) exemption has generally not been available to a 
foreign private issuer that had a class of securities registered under 
Exchange Act Section 12 or had a Section 15(d) reporting obligation, 
active or suspended, during the previous 18 months.\35\ The exemption 
has similarly been unavailable to an issuer that succeeded to the 
Exchange Act reporting obligations of another company following a 
merger, consolidation, acquisition or exchange of shares.\36\
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    \35\ Exchange Act Rule 12g3-2(d)(1) (17 CFR 240.12g3-2(d)(1)). 
The 18-month prohibition does not apply to a Canadian issuer that 
incurred Section 15(d) reporting obligations solely from the filing 
of a registration statement under the Commission's 
Multijurisdictional Disclosure System (``MJDS'').
    \36\ Exchange Act Rule 12g3-2(d)(2) (17 CFR 240.12g3-2(d)(2)). 
Similarly, MJDS filers are not subject to this restriction.
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    However, in March 2007, the Commission adopted amendments to Rule 
12g3-2, which enable a foreign private issuer to claim the Rule 12g3-
2(b) exemption immediately upon the effectiveness of its termination of 
Exchange Act registration and reporting pursuant to newly adopted 
Exchange Act Rule 12h-6.\37\ While these amendments eliminated the 18-
month and successor issuer prohibitions for issuers terminating their 
Exchange Act registration and reporting under Rule 12h-6, the 
prohibitions still apply to foreign private issuers that have exited 
the Exchange Act reporting regime under Exchange Act Rule 12g-4 or 12h-
3.\38\
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    \37\ 17 CFR 240.12h-6. The Commission adopted these Rule 12g3-2 
amendments and Rule 12h-6 in Release No. 34-55540 (March 27, 2007), 
72 FR 16934 (April 5, 2007).
    \38\ 17 CFR 240.12g-4 and 240.12h-3. Both Rules 12g-4 and 12h-3 
permit an issuer to exit the Exchange Act reporting regime following 
the filing of a Form 15 (17 CFR 249.323), which certifies that it 
has fewer than 300 record holders or less than 500 record holders 
and total assets not exceeding $10 million on the last day of each 
of its most recent 3 fiscal years.
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    In order to maintain the Rule 12g3-2(b) exemption, an issuer must 
furnish to the Commission on an ongoing basis its non-U.S. disclosure 
documents. Until the March 2007 amendments, the Commission required an 
issuer to submit those documents in paper to the Commission. The March 
amendments require an issuer that has obtained the Rule 12g3-2(b) 
exemption, upon the effectiveness of its termination of registration 
and reporting pursuant to newly adopted Rule 12h-6, to publish its non-
U.S. disclosure documents on an ongoing basis on its Internet Web site 
or through an electronic information delivery system generally 
available to the public in its primary trading market, rather than 
submit that information in paper to the Commission.\39\ The amendments 
further permit a foreign private issuer that has obtained or will 
obtain the Rule 12g3-2(b) exemption, upon application to the Commission 
and not pursuant to Rule 12h-6, to publish electronically in the same 
manner its non-U.S. documents required to maintain the exemption.\40\
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    \39\ Exchange Act Rule 12g3-2(e) (17 CFR 240.12g3-2(e)).
    \40\ Exchange Act Rule 12g3-2(f) (17 CFR 240.12g3-2(f)).
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    The March 2007 amendments further clarified the English translation 
requirements under Rule 12g3-2(b).\41\ The amendments provide that, 
when electronically publishing its non-U.S. documents required to 
maintain the Rule 12g3-2(b) exemption, at a minimum, a foreign private 
issuer must electronically publish English translations of the 
following documents if in a foreign language:
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    \41\ Rule 12g3-2(b)(4) (17 CFR 240.12g3-2(b)(4)) provides that 
copies furnished to the Commission of press releases and any 
materials distributed directly to security holders must be in 
English, and states that English summaries and versions may be used 
instead of English translations. However, the rule does not specify 
what other documents must be translated fully into English, and when 
summaries or versions may be used.
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     Its annual report, including or accompanied by annual 
financial statements;
     Interim reports that include financial statements;
     Press releases; and
     All other communications and documents distributed 
directly to security holders of each class of securities to which the 
exemption relates.\42\
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    \42\ Note 1 to Exchange Act Rule 12g3-2(e).
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    The March 2007 amendments also provide that, for a foreign private 
issuer that electronically publishes its non-U.S. disclosure documents, 
the Rule 12g3-2(b) exemption remains in effect for as long as the 
issuer fulfills the ongoing non-U.S. disclosure requirement, or until 
the issuer registers a class of securities under Section 12 of the 
Exchange Act or incurs reporting obligations under Section 15(d) of the 
Exchange Act.\43\ This is consistent with the Commission's treatment of 
issuers making paper submissions under Rule 12g3-2(b).
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    \43\ 15 U.S.C. 78o(d).
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C. Proposed Rule 12g3-2 Amendments

    Since the initial adoption of Rule 12g3-2(b) four decades ago, the 
globalization of securities markets, advances in information 
technology, the increased use of ADR facilities by foreign companies to 
trade their securities in the United States, and other factors have 
increased significantly the number of foreign companies that have 
engaged in cross-border activities, as well as increased the amount of 
U.S. investor interest in the securities of foreign companies. These 
developments led us recently to re-evaluate and revise the Commission 
rules governing when a foreign private issuer may terminate its 
Exchange Act registration and reporting obligations.\44\

[[Page 10105]]

We believe these same factors warrant reconsidering the Commission 
rules that determine when a foreign private issuer must enter the 
Section 12(g) regime as well.
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    \44\ Several commenters on Rule 12h-6 encouraged the Commission 
to address the registration requirements under Section 12(g) for 
foreign private issuers as well as the rules relating to termination 
of Exchange Act registration and reporting.
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    We propose to amend Exchange Act Rule 12g3-2 to permit a foreign 
private issuer to claim the Rule 12g3-2(b) exemption, without having to 
submit an application to the Commission, as long as:
     The issuer is not required to file or furnish reports 
under Exchange Act Section 13(a) \45\ or 15(d) of the Act;
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    \45\ 15 U.S.C. 78m(a).
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     The issuer currently maintains a listing of the subject 
class of securities on one or more exchanges in a foreign jurisdiction 
that, either singly or together with the trading of the same class of 
the issuer's securities in another foreign jurisdiction, constitutes 
the primary trading market for those securities;
     Either:
    [cir] The average daily trading volume of the subject class of 
securities in the United States for the issuer's most recently 
completed fiscal year has been no greater than 20 percent of the 
average daily trading volume of that class of securities on a worldwide 
basis for the same period; or
    [cir] The issuer has terminated its registration of a class of 
securities under Section 12(g) of the Act, or terminated its obligation 
to file or furnish reports under Section 15(d) of the Act, pursuant to 
Exchange Act Rule 12h-6; and
     Unless claiming the exemption in connection with or 
following its recent Exchange Act deregistration, the issuer has 
published specified non-U.S. disclosure documents, required to be made 
public from the first day of its most recently completed fiscal year, 
in English on its Internet Web site or through an electronic 
information delivery system generally available to the public in its 
primary trading market.
    All foreign private issuers that met the above requirements would 
be immediately exempt from Exchange Act registration under Rule 12g3-
2(b) without having to apply to, or otherwise notify, the Commission, 
concerning the exemption. Thus, a foreign private issuer that exceeds 
the 300 U.S. holder threshold could automatically claim the exemption 
as long as it is not otherwise subject to Exchange Act reporting, meets 
the foreign listing condition, has 20 percent or less of its worldwide 
trading market in the United States, and electronically publishes the 
specified non-U.S. disclosure documents, as required under the proposed 
amendments.\46\
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    \46\ An issuer that has fewer than 300 U.S. resident 
shareholders would continue to be exempt from Exchange Act 
registration without any other conditions unless it also sought to 
establish the Rule 12g3-2(b) exemption.
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    An issuer could also immediately claim the Rule 12g3-2(b) exemption 
upon the effectiveness of, or following its recent Exchange Act 
deregistration, whether pursuant to Rule 12g-4, 12h-3, or 12h-6, or the 
suspension of its reporting obligations under Section 15(d),\47\ if it 
met the above requirements absent the electronic publication condition 
for its most recently completed fiscal year. Since a recently 
deregistered company will already have filed its Exchange Act reports 
on EDGAR for its most recently completed fiscal year, such a prior year 
publication requirement is not necessary to protect investors.
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    \47\ An issuer may suspend its Section 15(d) reporting 
obligations under Rule 12h-3 or Section 15(d) itself. The statutory 
section provides that suspension occurs if, on the first day of the 
fiscal year, other than the year in which the issuer's registration 
statement went effective, the issuer's record holders number less 
than 300.
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    Like the March 2007 amendments, the proposed rules would require 
any issuer, whether a prior registrant or not, to maintain the Rule 
12g3-2(b) exemption by publishing, on an ongoing basis and for each 
subsequent fiscal year, in English, on its Internet Web site or through 
an electronic information delivery system generally available to the 
public in its primary trading market, the information specified for its 
last fiscal year. The proposed rules would require the electronic 
publication in English of the same types of information required under 
the March 2007 amendments.
    The proposed rules provide that the Rule 12g3-2(b) exemption will 
remain in effect for as long as a foreign private issuer satisfies the 
electronic publication condition, or until:
     The issuer no longer maintains a listing for the subject 
class of securities on one or more exchanges in its primary trading 
market;
     The average daily trading volume of the subject class of 
securities in the United States exceeds 20 percent of the average daily 
trading volume of that class of securities on a worldwide basis for the 
issuer's most recently completed fiscal year, other than the year in 
which the issuer first claims the exemption; or
     The issuer registers a class of securities under section 
12 of the Act or incurs reporting obligations under section 15(d) of 
the Act.
    By requiring the electronic publication in English of specified 
non-U.S. disclosure documents for an issuer claiming the Rule 12g3-2(b) 
exemption, the proposed amendments should make it easier for U.S. 
investors to gain access to a foreign private issuer's material non-
U.S. disclosure documents, and make better informed decisions regarding 
whether to invest in that issuer's equity securities through the over-
the-counter market in the United States or otherwise. Thus, the 
proposed amendments should foster increased efficiency in the trading 
of the issuer's securities for U.S. investors.
    By enabling a qualified foreign private issuer to claim the Rule 
12g3-2(b) exemption automatically, and without regard to the number of 
its U.S. shareholders, the proposed rule amendments should encourage 
more foreign private issuers to claim the Rule 12g3-2(b) exemption. 
That would enable the establishment of additional ADR facilities, make 
it easier for broker-dealers to fulfill their obligations under 
Exchange Act Rule 15c2-11 to investors with respect to the equity 
securities of a non-reporting foreign company, and facilitate the 
resale of a foreign company's securities to QIBs in the United States 
under Securities Act Rule 144A. Consequently, the proposed rule 
amendments should foster the increased trading of a foreign company's 
securities in the U.S. over-the-counter market, which could benefit 
investors.

II. Discussion

A. Proposed Non-Reporting Condition

    Proposed Exchange Act Rule 12g3-2(b) would require a foreign 
private issuer to have no reporting obligations under Exchange Act 
Section 13(a) or 15(d) as a condition to the exemption under the 
Rule.\48\ Like the current non-Exchange Act reporting condition of Rule 
12g3-2(b),\49\ the purpose of this provision is to prevent an issuer 
from claiming the Rule 12g3-2(b) exemption when it already has incurred 
active Exchange Act reporting obligations.
---------------------------------------------------------------------------

    \48\ Proposed Exchange Act Rule 12g3-2(b)(1).
    \49\ Rule 12g3-2(d)(1) (17 CFR 240. 12g3-2(d)(1)).
---------------------------------------------------------------------------

1. Non-Reporting Issuers
    A foreign private issuer would satisfy the proposed non-reporting 
condition if it did not already have reporting obligations under either 
Exchange Act Section 13(a) or 15(d). Since Section 13(a) imposes 
reporting obligations on an issuer that has registered a class of 
securities under Section 12, a foreign private issuer that has an 
effective registration statement filed with the Commission under 
Section 12(b), for

[[Page 10106]]

example, covering a class of debt securities, or Section 12(g), 
covering a particular class of equity securities, would be ineligible 
to claim the exemption. This treatment is consistent with the current 
Exchange Act reporting prohibition under Rule 12g3-2(b).\50\
---------------------------------------------------------------------------

    \50\ Exchange Act Rule 12g3-2(d)(1).
---------------------------------------------------------------------------

    Currently an issuer may apply for the Rule 12g3-2(b) exemption, 
although it may have exceeded the Section 12(g) shareholder thresholds 
on the last day of its most recently completed fiscal year, as long as 
the statutory 120-day period for filing a Section 12(g) registration 
statement has not lapsed.\51\ We propose to eliminate this 120-day 
submission requirement because, under the proposed revised Rule 12g3-
2(b) exemptive scheme, we do not believe that this requirement is 
necessary to protect investors.
---------------------------------------------------------------------------

    \51\ Exchange Act Rule 12g3-2(b)(2).
---------------------------------------------------------------------------

    The proposed revised exemptive scheme does not depend on an 
issuer's determination of the number of its worldwide or U.S. 
shareholders, and does not require that it submit a written application 
disclosing that information. Instead, it requires a foreign private 
issuer to satisfy a U.S. trading volume standard measured for its most 
recently completed fiscal year, meet a foreign listing requirement, and 
electronically publish specified material non-U.S. disclosure documents 
in English. If we also required an issuer to claim the exemption within 
the 120-day period, we believe some issuers, particularly smaller ones, 
would be unable to meet that deadline.\52\ Assuming that those issuers 
continued to satisfy the other conditions to Rule 12g3-2(b), they would 
have to wait until the end of their current fiscal year and the start 
of a new 120-day period before they could claim the exemption. We see 
little benefit in making investors wait several months before being 
able to gain electronic access to the issuer's material non-U.S. 
disclosure documents in English.
---------------------------------------------------------------------------

    \52\ Under current Rule 12g3-2(b), several issuers have 
requested Commission staff to accept their applications although the 
120-day period has lapsed.
---------------------------------------------------------------------------

    As is currently the case, an issuer that, on the last day of its 
most recently completed fiscal year, has not exceeded the 500 worldwide 
holder threshold under Exchange Act Section 12(g), the 300 U.S. holder 
threshold under Rule 12g3-2(a), or the $10 million annual asset 
threshold under Rule 12g-1, could claim an exemption from Section 12(g) 
registration for a class of equity securities based upon one or more of 
those provisions, and would not have to comply with Rule 12g3-2(b)'s 
conditions, if it chose not to rely on that rule for its exemption from 
Section 12(g) registration. However, such an issuer would have to claim 
the Rule 12g3-2(b) exemption, and satisfy all of its conditions, if it 
sought to have established an ADR facility for its equity securities. 
ADRs must be registered on a Form F-6, which requires an issuer of the 
deposited securities to be either an Exchange Act reporting company or 
have the Rule 12g3-2(b) exemption.
2. Deregistered Issuers
    A foreign private issuer that has suspended its Exchange Act 
reporting obligations upon the filing of Form 15, pursuant to Rule 12g-
4 or 12h-3, or Form 15F, pursuant to Rule 12h-6, would satisfy the non-
reporting requirement upon the effectiveness of its deregistration, 
assuming that it had not otherwise incurred additional Exchange Act 
reporting obligations. Similarly, a foreign private issuer that 
suspended its reporting obligations pursuant to the statutory terms of 
Section 15(d) would satisfy the non-reporting condition immediately 
upon its determination that it had less than 300 shareholders as of the 
beginning of its most recent fiscal year.
    Thus, unlike the current rule, the proposed provision would not 
require an issuer to look back over the previous eighteen months and 
determine whether it had Exchange Act reporting obligations during that 
period.\53\ We eliminated the eighteen month requirement when adopting 
the March 2007 rule amendments that granted the Rule 12g3-2(b) 
exemption automatically to a foreign private issuer upon the 
effectiveness of its termination of Exchange Act registration and 
reporting pursuant to Rule 12h-6. We see no reason to treat differently 
foreign private issuers that have terminated their Section 12(g) 
registration under the older Rule 12g-4 following the filing of a Form 
15.\54\ Elimination of a lengthy waiting period would help hasten the 
publishing of a foreign private issuer's non-U.S. disclosure documents 
required under the exemption and, thus, help improve the ability of 
U.S. investors to make informed decisions regarding that issuer's 
securities.
---------------------------------------------------------------------------

    \53\ Exchange Act Rule 12g3-2(d)(1) provides that the Rule 12g3-
2(b) exemption is generally not available to a foreign private 
issuer that, during the preceding 18 months, has registered a class 
of securities under Exchange Act Section 12 or had an active or 
suspended Section 15(d) reporting obligation.
    \54\ Although a qualifying prior Form 15 filer may terminate its 
Exchange Act registration and reporting under Rule 12h-6, only a 
small number have done so.
---------------------------------------------------------------------------

    For the same reason, proposed Rule 12g3-2(b) would eliminate the 
current rule's general prohibition against making the exemption 
available to an issuer that has had active or suspended reporting 
obligations under Section 15(d) during a prescribed period.\55\ The 
current rule precludes any issuer that suspended its reporting 
obligations under Section 15(d) from ever being able to obtain the Rule 
12g3-2(b) exemption, no matter how much time has elapsed from the 
effectiveness of its suspension. We permitted an issuer to claim the 
Rule 12g3-2(b) exemption immediately upon the effectiveness of its 
deregistration under Rule 12h-6, although its reporting obligations 
derived from Section 15(d). Similarly, we propose that an otherwise 
eligible issuer could claim the Rule 12g3-2(b) exemption upon the 
effectiveness of the suspension of its reporting obligations under 
Section 15(d) or pursuant to Rule 12h-3 and following the filing of a 
Form 15. As long as it has not once again incurred active Section 15(d) 
reporting obligations,\56\ an issuer would be able to claim the Rule 
12g3-2(b) exemption and publish its non-U.S. disclosure documents 
accordingly.
---------------------------------------------------------------------------

    \55\ Rule 12g3-2(d)(1). Unlike under Section 12(g) and Rule 12g-
4, an issuer can only suspend, and cannot terminate, its reporting 
obligations under Section 15(d) and Rule 12h-3.
    \56\ Following deregistration, an issuer would once again incur 
Section 15(d) reporting obligations upon the effectiveness of a new 
Securities Act registration statement.
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Comment Solicited
    We solicit comment on the proposed non-Exchange Act reporting 
condition.
     Should we require an issuer not to have Exchange Act 
reporting obligations as a condition to claiming the Rule 12g3-2(b) 
exemption, as proposed?
     Should we permit an issuer that has Exchange Act reporting 
obligations regarding a class of debt securities to claim the Rule 
12g3-2(b) exemption for a class of equity securities without having 
first to deregister the class of debt securities? Should we permit an 
issuer that has Exchange Act reporting obligations regarding a 
particular class of equity securities to claim the Rule 12g3-2(b) 
exemption regarding a different class of equity securities?
     Should we permit an issuer to claim the Rule 12g3-2(b) 
exemption if it meets the trading volume condition and the other 
proposed conditions although the statutory 120-day period has lapsed, 
as proposed? If not, why should we retain the 120-day statutory 
requirement for Rule 12g3-2(b) when that provision pertains to a 
shareholder-based requirement? What are the benefits to investors of 
eliminating or retaining the 120-day requirement?

[[Page 10107]]

     Should we require an issuer not to have Exchange Act 
reporting obligations over a specified period before claiming the 
exemption? Should the specified period be 3, 6, 12, 18, or 24 months, 
or some other specified period?
     Should we permit an otherwise eligible issuer to claim the 
Rule 12g3-2(b) exemption immediately upon the termination of its 
Section 12(g) registration or the suspension of its Section 15(d) 
reporting obligations, as proposed?

B. Proposed Foreign Listing Condition

    As a second condition to the use of the Rule 12g3-2(b) exemption, 
the proposed amendments would require an issuer currently to maintain a 
listing of the subject class of securities on one or more exchanges in 
a foreign jurisdiction that, either singly or together with the trading 
of the same class of the issuer's securities in another foreign 
jurisdiction, constitutes the primary trading market for those 
securities. These proposed rule amendments are substantially similar to 
the foreign listing condition and definition of primary trading market 
adopted as part of the March 2007 amendments.\57\
---------------------------------------------------------------------------

    \57\ Exchange Act Rule 12h-6(a)(3) (17 CFR 240.12h-6(a)(3)) and 
Exchange Act Rule 12h-6(f)(5) (17 CFR 240.12h-6(f)(5)).
---------------------------------------------------------------------------

    The purpose of the foreign listing condition is to help assure that 
there is a non-U.S. jurisdiction that principally regulates and 
oversees the issuance and trading of the issuer's securities and the 
issuer's disclosure obligations to investors. This foreign listing 
condition makes more likely the availability of a set of non-U.S. 
securities disclosure documents to which a U.S. investor may turn for 
material information when making investment decisions about the 
issuer's securities in the U.S. over-the-counter market. This foreign 
listing condition is also consistent with the Commission staff's past 
and current practice of administering the Rule 12g3-2(b) exemption.
    The proposed rule amendments define primary trading market to mean 
that at least 55 percent of the trading in the issuer's subject class 
of securities took place in, on or through the facilities of a 
securities market or markets in a single foreign jurisdiction or in no 
more than two foreign jurisdictions during the issuer's most recently 
completed fiscal year. The proposed amendments further instruct that, 
if a foreign private issuer aggregates the trading of its subject class 
of securities in two foreign jurisdictions for the purpose of this 
paragraph, the trading for the issuer's securities in at least one of 
the two foreign jurisdictions must be larger than the trading in the 
United States for the same class of the issuer's securities.
    Like the 2007 amendments, the proposed amendments would permit an 
issuer to aggregate its securities over multiple markets in one or two 
foreign jurisdictions in recognition that many foreign private issuers 
have listings on more than one exchange in one or more non-U.S. 
markets. Unlike the earlier amendments, however, the proposed rule 
amendments would not require an issuer establishing the exemption, but 
not deregistering, to have maintained a foreign listing for the 
previous twelve months, or for some other specified period of time, 
since we see no reason to exclude newly listed foreign companies from 
eligibility. We note that many foreign exchanges require substantial 
initial disclosure before a listing is accepted. In addition, there is 
currently no similar requirement for a non-reporting company applying 
for the Rule 12g3-2(b) exemption.
    Under Rule 12h-6, an issuer must certify that, at the time it files 
its Form 15F,\58\ it meets that rule's foreign listing requirement. 
That issuer would also have to meet the proposed foreign listing 
requirement upon the effectiveness of its Exchange Act termination of 
registration and reporting under Rule 12h-6 in order to be able to 
claim the Rule 12g3-2(b) exemption. Since typically that effectiveness 
occurs 90 days from the date of filing of the Form 15F, we expect most 
Form 15F filers will satisfy the proposed foreign listing requirement 
under Rule 12g3-2(b).\59\
---------------------------------------------------------------------------

    \58\ 17 CFR 249.324. Similar to a Form 15, Form 15F is the form 
that a foreign private issuer must file to certify that it meets the 
conditions for terminating its Exchange Act registration and 
reporting obligations under Rule 12h-6.
    \59\ Unless the Commission objects, termination of an issuer's 
reporting and registration under Rule 12h-6 is effective 90 days 
after the filing of its Form 15F. Exchange Act Rule 12h-6(g)(1) (17 
CFR 240.12h-6(g)(1)).
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed foreign listing condition.
     Should we require an issuer to maintain a listing on one 
or more exchanges in one or two foreign jurisdictions comprising its 
primary trading market as a condition to the Rule 12g3-2(b) exemption, 
as proposed? Should we require that the foreign exchange be part of a 
recognized national market system or possess certain characteristics? 
If so, what characteristics would be appropriate?
     Should we define primary trading market to mean that at 
least 55 percent of the trading in the issuer's subject class of 
securities took place in, on or through the facilities of a securities 
market or markets in a single foreign jurisdiction or in no more than 
two foreign jurisdictions during the issuer's most recently completed 
fiscal year, as proposed? If not, is there another percentage, such as 
50, 51, 60, or some other percent, that is more appropriate?
     Should we permit the trading volume in an issuer's primary 
trading market to be less than 50 percent of its worldwide trading 
volume as long as the primary trading market's trading volume is 
greater than its U.S. trading volume?
     Should we also require that, if a foreign private issuer 
aggregates the trading of its subject class of securities in two 
foreign jurisdictions for the purpose of the foreign listing condition, 
the trading for the issuer's securities in at least one of the two 
foreign jurisdictions must be larger than the trading in the United 
States for the same class of the issuer's securities, as proposed? 
Should we instead permit an issuer to count the trading of its 
securities only in one foreign jurisdiction or only on one exchange in 
each of two foreign jurisdictions for the purpose of the foreign 
listing condition?
     Are there a significant number of issuers that may be 
listed on a foreign exchange but that would not meet the 55 percent 
threshold under the primary trading market definition, for example, due 
to being traded on more than two foreign exchanges, and which would 
otherwise satisfy the current or proposed conditions of Rule 12g3-2(b)? 
If so, what are specific examples of those issuers? Should we require 
those issuers to meet a lower U.S. relative trading volume threshold to 
be eligible for the Rule 12g3-2(b) exemption? If so, should the 
threshold be 3, 5, 7, 10 or some other percent of worldwide trading 
volume? What would be the advantages or disadvantages of such an 
approach?
     Should we require an issuer to maintain a listing in its 
jurisdiction of incorporation, organization or domicile instead of, or 
in addition to, a listing in its primary trading market? Would such a 
requirement increase the likelihood that a non-U.S. jurisdiction is 
principally regulating the trading in an issuer's securities?
     Should we permit an unlisted issuer to claim the Rule 
12g3-2(b) exemption as long as it publishes voluntarily the same 
documents that a listed company is required to publish in its home 
jurisdiction?

[[Page 10108]]

C. Proposed Quantitative Standard

1. Trading Volume Benchmark
    Proposed Rule 12g3-2(b) would permit an otherwise eligible issuer 
to claim an exemption from Section 12(g) registration by meeting a 
quantitative standard that does not depend on a count of the issuer's 
U.S. holders. Under the proposed rule amendments, regardless of the 
number of its U.S. holders, an issuer would be eligible to claim the 
Rule 12g3-2(b) exemption if the average daily trading volume of the 
subject class of securities in the United States for the issuer's most 
recently completed fiscal year has been no greater than 20 percent of 
the average daily trading volume of that class of securities on a 
worldwide basis for the same period.\60\
---------------------------------------------------------------------------

    \60\ Proposed Exchange Act Rule 12g3-2(b)(3)(i).
---------------------------------------------------------------------------

    We adopted a trading volume benchmark as part of the 2007 
amendments concerning foreign deregistration because we believed it to 
be a more direct and less costly measure of the relative U.S. market 
interest in a foreign private issuer's securities than one based on a 
count of the issuer's shareholders.\61\ We believe the same 
considerations apply to the proposed amendments of the rules that 
determine when a foreign private issuer must register a class of equity 
securities under Section 12(g). If only 20 percent or less of an 
issuer's worldwide trading volume occurs in the United States, we 
believe the relative U.S. market interest in those securities does not 
warrant subjecting the issuer to Exchange Act reporting requirements.
---------------------------------------------------------------------------

    \61\ See Release No. 34-55540, Parts I.A and II.A.1.a.ii. We 
also adopted a 20 percent trading volume benchmark in the definition 
of ``substantial U.S. market interest'' under Regulation S. See 17 
CFR 230.902(j).
---------------------------------------------------------------------------

    The 2007 amendments established a trading volume standard that 
permits a qualified foreign private issuer to terminate its Exchange 
Act registration and reporting obligations if its U.S. average daily 
trading volume is no greater than 5 percent of its worldwide average 
daily trading volume. We believe it is appropriate to have a stricter 
trading volume standard for determining when an issuer may exit the 
Exchange Act registration and reporting regime compared to when it must 
enter that regime. In the former instance, an issuer has availed itself 
of U.S. market facilities and filed Exchange Act reports upon which 
U.S. investors have relied. A similar relationship exists between the 
current shareholder-based standards governing entrance into and exit 
from the Exchange Act reporting regime.\62\
---------------------------------------------------------------------------

    \62\ Compare Exchange Act Section 12(g)'s 500 or greater 
shareholder standard compelling registration with the less than 300 
U.S. or worldwide shareholder standard permitting deregistration 
under Exchange Act Rules 12h-6, 12g-4 and 12h-3.
---------------------------------------------------------------------------

    The proposed rule amendments would require an issuer to calculate 
U.S. and worldwide trading volume in the same fashion as under Rule 
12h-6.\63\ Under that rule, when determining its U.S. average daily 
trading volume, an issuer must include all transactions, whether on-
exchange or off-exchange. When determining its worldwide average daily 
trading volume, an issuer must include on-exchange transactions, and 
may include off-exchange transactions. The sources of trading volume 
information may include publicly available sources, market data vendors 
or other commercial information service providers upon which an issuer 
has reasonably relied in good faith, and as long as the information 
does not duplicate any other trading volume information obtained from 
exchanges or other sources.
---------------------------------------------------------------------------

    \63\ The instructions for calculating trading volume are set 
forth in Instruction 3 to Item 4 of Form 15F and in Release No. 34-
55540, Part II.A.1.a.ii.
---------------------------------------------------------------------------

    The proposed amendments would require an issuer to measure its 
trading volume for its most recently completed fiscal year. In 
contrast, Rule 12h-6 enables an issuer to make its trading volume 
determinations for a recent 12-month period, which is defined as a 12-
calendar-month period that ended no more than 60 days before the filing 
date of an issuer's Form 15F.\64\ A rolling 12-month period is 
appropriate in the context of deregistration since the relevant rules 
do not require an eligible issuer to deregister within a particular 
time frame. However, we are not proposing a similar rolling 60-day 
window for the Rule 12g3-2 amendments since Section 12(g) posits the 
last day of an issuer's fiscal year as the measuring date for 
determining whether an issuer must register a class of securities under 
that statutory section.
---------------------------------------------------------------------------

    \64\ Exchange Act Rule 12h-6(f)(6) (17 CFR 240.12h-6(f)(6)).
---------------------------------------------------------------------------

2. Rule 12h-6 Issuers
    An issuer that terminates its Exchange Act registration and 
reporting regarding a class of equity securities under Rule 12h-6 must 
meet either that rule's trading volume benchmark or its record holder 
standard.\65\ Rule 12h-6's trading volume standard requires an issuer's 
U.S. trading volume to be no greater than 5 percent of its worldwide 
trading volume, and to be measured over a recent 12-month period.\66\ 
Rule 12h-6's alternative record holder standard requires an issuer's 
worldwide or U.S. holders to be less than 300.\67\ An issuer that has 
proceeded under either of Rule 12h-6's quantitative provisions obtains 
the Rule 12g3-2(b) exemption upon the termination of its registration 
and reporting under Rule 12h-6.
---------------------------------------------------------------------------

    \65\ Exchange Act Rule 12h-6(a)(4) (17 CFR 240.12h-6(a)(4)). 
Thus far, most issuers that have terminated their registration and 
reporting requirements under Rule 12h-6 have relied on the trading 
volume standard.
    \66\ Exchange Act Rule 12h-6(a)(4)(i) (17 CFR 240.12h-
6(a)(4)(i)). Rule 12h-6(f)(6) (17 CFR 240.12h-6(f)(6)) defines a 
recent 12-month period to mean a 12-calendar-month period that ended 
no more than 60 days before the filing date of Form 15F.
    \67\ Exchange Act Rule 12h-6(a)(4)(ii) (17 CFR 240.12h-
6(a)(4)(ii)).
---------------------------------------------------------------------------

    Because a Rule 12h-6 issuer will have met a more stringent trading 
volume test, although most likely for a different 12-month period, we 
do not believe it is necessary to require that issuer to recalculate 
its relative U.S. trading volume for the previous 12 months upon the 
effectiveness of its deregistration under Rule 12h-6 for the purpose of 
determining whether it may claim the Rule 12g3-2(b) exemption. 
Similarly, we believe that an issuer that has satisfied Rule 12h-6's 
strict record holder standard should continue to be able to claim the 
Rule 12g3-2(b) exemption upon the termination of its registration and 
reporting under Rule 12h-6 as long as it meets the proposed Rule 12g3-
2(b) foreign listing requirement.
Comment Solicited
    We solicit comment on the proposed Rule 12g3-2(b) quantitative 
provision.
     Should an issuer be able to claim the Rule 12g3-2(b) 
exemption if the U.S. trading volume of its subject class of securities 
is no greater than a specified percentage of its worldwide trading 
volume for the previous 12 months, even if the number of its U.S. 
shareholders is 300 or greater, as proposed?
     If so, should the U.S. trading volume standard be no 
greater than 20 percent of worldwide trading volume, as proposed? 
Should the U.S. trading volume standard instead be no greater than 5, 
10, 15, 25, 30 or some other percent of worldwide trading volume?
     Is there another quantitative measure that is a more 
appropriate measure of relative U.S. investor interest in a foreign 
private issuer's securities than the proposed trading volume standard?

[[Page 10109]]

     Should we not impose any quantitative measure relating to 
U.S. market interest when determining whether a foreign private issuer 
should be subject to Exchange Act registration?
     Should we require an issuer to determine its relative U.S. 
trading volume for its most recently completed fiscal year, as 
proposed? If not, should the measuring period be a shorter period, such 
as 3 or 6 months? Should it be a longer period, such as 18 or 24 
months? Should the measuring period be the same as a recent 12-month 
period, as under Rule 12h-6?
     Should we require an issuer to calculate its U.S. and 
worldwide trading volumes as under Rule 12h-6, as proposed? Should we 
require additional, or different, requirements or guidance regarding 
off-exchange transactions?
     Should we permit an issuer's sources of trading volume 
information to include publicly available sources, market data vendors 
or other commercial information service providers upon which the issuer 
has reasonably relied in good faith? Are there other parties or 
services that we should specify as permissible sources of trading 
volume information?
     Should we permit an issuer that has satisfied Rule 12h-6's 
trading volume benchmark to claim the Rule 12g3-2(b) exemption upon the 
effectiveness of its Rule 12h-6 deregistration, assuming it meets the 
proposed Rule 12g3-2(b) foreign listing requirement, as proposed?
     Similarly should we permit an issuer that has satisfied 
Rule 12h-6's alternative record holder condition to claim the Rule 
12g3-2(b) exemption upon the effectiveness of its Rule 12h-6 
deregistration as long as it meets the proposed Rule 12g3-2(b) foreign 
listing requirement, as proposed?
     Are there some currently Rule 12g3-2(b)-exempt companies 
that would lose the exemption upon the effectiveness of the proposed 
rule amendments because their U.S. trading volume exceeds the proposed 
threshold and the number of their U.S. holders is 300 or greater? If 
so, are there a significant number of such companies and how should we 
treat them? Should we provide a transition period for those companies 
that would grant them a longer period of time before they would have to 
register their securities under Exchange Act Section 12(g)? \68\ Should 
we provide a ``grandfather'' provision or issue an order that would 
permit issuers that have currently claimed the exemption under Rule 
12g3-2(b), but would exceed the proposed trading volume threshold, to 
continue to be exempt from Section 12(g) provided that they comply with 
all other conditions? Provide specific examples of such companies.
---------------------------------------------------------------------------

    \68\ See Part II.L. of this release for discussion of a proposed 
three-year transition period.
---------------------------------------------------------------------------

     Should we establish a different U.S. trading volume 
threshold for companies from certain countries or regions, for example, 
Canada, which may have a greater relative U.S. market presence than 
other foreign companies? If so, should that threshold be 25, 30, 35 or 
some higher percent of worldwide trading volume?

D. Proposed Electronic Publishing of Non-U.S. Disclosure Documents

1. Electronic Publishing Requirement To Claim Exemption
    Unless in connection with or following a recent Exchange Act 
deregistration, in order to claim the Rule 12g3-2(b) exemption, the 
proposed amendments would require an issuer to have published in 
English, on its Internet Web site or through an electronic information 
delivery system generally available to the public in its primary 
trading market, information that, from the first day of its most 
recently completed fiscal year, it:
     Has made public or been required to make public pursuant 
to the laws of the country of its incorporation, organization or 
domicile;
     Has filed or been required to file with the principal 
stock exchange in its primary trading market on which its securities 
are traded and which has been made public by that exchange; and
     Has distributed or been required to distribute to its 
security holders.\69\
---------------------------------------------------------------------------

    \69\ Proposed Exchange Act Rule 12g3-2(b)(4)(i).

These are the same categories of information that the Commission has 
historically required a non-reporting company to submit in paper when 
applying for the exemption under Rule 12g3-2(b).\70\ They also are the 
same non-U.S. disclosure documents that, more recently, the Commission 
has required an issuer to publish electronically in order to maintain 
its Rule 12g3-2(b) exemption claimed upon the effectiveness of its 
deregistration under Rule 12h-6.\71\
---------------------------------------------------------------------------

    \70\ Exchange Act Rules 12g3-2(b)(1)(i).
    \71\ Exchange Act Rule 12g3-2(e)(2) (17 CFR 240. 12g3-2(e)(2)).
---------------------------------------------------------------------------

    The purpose of this non-U.S. publication condition is to provide 
U.S. investors with ready access to material information when trading 
in the issuer's equity securities in the over-the-counter market.\72\ 
This condition also would assist U.S. investors who are interested in 
trading the issuer's securities in its primary securities market. 
Moreover, having a foreign private issuer's key non-U.S. disclosure 
documents electronically published in English would assist broker-
dealers in meeting their Rule 15c2-11 obligations to investors and 
facilitate resales of that issuer's securities to qualified 
institutional buyers under Rule 144A.
---------------------------------------------------------------------------

    \72\ Any trading of a foreign private issuer's Rule 12g3-2(b) 
exempt securities in the United States would have to occur through 
an over-the-counter market such as that maintained by the Pink 
Sheets, LLC since, as of April, 1998, the NASD has required a 
foreign private issuer to register a class of securities under 
Exchange Act Section 12 before its securities could be traded 
through the electronic over-the-counter bulletin board administered 
by Nasdaq. See, for example, NASD Notice to Members (January 1998).
---------------------------------------------------------------------------

    As under the current rule, the proposed amendments would require an 
issuer only to publish electronically information that is material to 
an investment decision regarding the subject securities, \73\ such as:
---------------------------------------------------------------------------

    \73\ Proposed Exchange Act Rule 12g3-2(b)(4)(ii). Athough the 
substantive requirements are the same, we have proposed conforming 
changes to General Instruction E and Part II, Item 9 of Form 15F to 
reflect the proposed renumbering of the non-U.S. publication 
requirements of Rule 12g3-2(b).
---------------------------------------------------------------------------

     Results of operations or financial condition;
     Changes in business;
     Acquisitions or dispositions of assets;
     The issuance, redemption or acquisition of securities;
     Changes in management or control;
     The granting of options or the payment of other 
remuneration to directors or officers; and
     Transactions with directors, officers or principal 
security holders.\74\
---------------------------------------------------------------------------

    \74\ These are the same types of information specified in 
current Exchange Act Rule 12g3-2(b)(3)) (17 CFR 240.12g3-2(b)(3)).
---------------------------------------------------------------------------

    As is currently required of an issuer that has terminated its 
Exchange Act registration and reporting obligations under Rule 12h-
6,\75\ the proposed rule amendments would require any issuer claiming 
the Rule 12g3-2(b) exemption to publish electronically, at a minimum, 
English translations of the following documents if in a foreign 
language:
---------------------------------------------------------------------------

    \75\ Note 1 to Exchange Act Rule 12g3-2(e) (17 CFR 240.12g3-
2(e)).
---------------------------------------------------------------------------

     Its annual report, including or accompanied by annual 
financial statements;
     Interim reports that include financial statements;
     Press releases; and
     All other communications and documents distributed 
directly to security holders of each class of

[[Page 10110]]

securities to which the exemption relates.\76\
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    \76\ Proposed Exchange Act Rule 12g3-2(b)(4)(iii).

These are the same documents for which the Commission staff has 
historically required English translations because of their importance 
to investors.\77\
---------------------------------------------------------------------------

    \77\ Current Rule 12g3-2(b)(4) (17 CFR 240.12g3-2(b)(4)) 
specifies only that press releases and shareholder communications 
must be in English. It also states that an issuer may provide an 
English summary or version instead of an English translation. 
However, Commission staff has consistently administered the current 
rule to require English translations of financial statements and the 
other specified documents because of their importance to investors.
---------------------------------------------------------------------------

    As proposed, an issuer that claimed the Rule 12g3-2(b) exemption, 
in connection with or following the recent effectiveness of its 
Exchange Act deregistration, would not have to comply with the 
electronic publication requirement for its last fiscal year.\78\ Since 
a recently deregistered company will already have filed its Exchange 
Act reports on EDGAR for its most recently completed fiscal year, such 
a prior year publication requirement is not necessary to protect 
investors.
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    \78\ Proposed Note 3 to proposed Exchange Act Rule 12(g)3-2(b).
---------------------------------------------------------------------------

2. Electronic Publishing Requirement To Maintain Exemption
    In order to maintain the Rule 12g3-2(b) exemption, the proposed 
amendments would require an issuer to publish the same information 
specified in the prior fiscal year provision, on an ongoing basis and 
for subsequent fiscal years, on its Internet Web site or through an 
electronic information delivery system in its primary trading 
market.\79\ This requirement would apply to any issuer claiming the 
exemption, whether or not a former Exchange Act registrant. Like the 
prior fiscal year publication condition, this ongoing publication 
condition would help assure that investors and other market 
participants have access to an issuer's specified non-U.S. disclosure 
documents, in English, which are material to an investment decision.
---------------------------------------------------------------------------

    \79\ Proposed Exchange Act Rule 12g3-2(c)(1).
---------------------------------------------------------------------------

    Similar to the current rule,\80\ the proposed rule amendments would 
require an issuer to publish electronically its non-U.S. disclosure 
documents promptly after the information has been made public, pursuant 
to its home jurisdiction laws, non-U.S. stock exchange rules, or 
shareholder rules and practices.\81\ As under current Commission staff 
practice, what constitutes ``promptly'' would depend on the type of 
document and the amount of time required to prepare an English 
translation. Currently an issuer typically must electronically publish 
or submit in paper a copy of a material press release on the same 
business day of its original publication.
---------------------------------------------------------------------------

    \80\ Exchange Act Rule 12g3-2(b)(1)(iii).
    \81\ Proposed Exchange Act Rule 12g3-2(c)(2). Form 6-K imposes a 
similar requirement.
---------------------------------------------------------------------------

    The proposed amendments would permit an issuer to meet Rule 12g3-
2(b)'s electronic publication requirement concurrently with the 
publishing in English of a non-U.S. disclosure document through an 
electronic information delivery system generally available to the 
public in its primary trading market. Thus, if an issuer's non-U.S. 
stock exchange or securities regulatory authority permits the issuer to 
publish electronically a required report on its electronic delivery 
system, and the public has ready access to the report and other 
documents maintained on the system,\82\ that electronic publication 
solely would satisfy the proposed Rule 12g3-2(b)'s electronic 
publishing requirements.
---------------------------------------------------------------------------

    \82\ An example of such a system is the System for Electronic 
Document Analysis and Retrieval (``SEDAR'') maintained by the 
Canadian Securities Administrators.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed condition requiring an issuer to 
publish electronically its non-U.S. disclosure documents.
     Should we require an issuer to publish its non-U.S. 
disclosure documents, made public since the beginning of its most 
recently completed fiscal year, on its Internet Web site or through an 
electronic information delivery system in its primary trading market, 
as a condition to claiming the Rule 12g3-2(b) exemption, other than in 
connection with or following the issuer's recent deregistration, as 
proposed? Should we also require an issuer that has recently 
deregistered to publish those non-U.S. disclosure documents on its 
Internet Web site or through an electronic information delivery system 
if it has not already done so as a condition to claiming the exemption?
     Should we require an issuer to publish electronically its 
non-U.S. disclosure documents on an ongoing basis and for subsequent 
fiscal years as a condition to maintaining the Rule 12g3-2(b) 
exemption, as proposed?
     Since one purpose of the proposed foreign listing 
condition is to increase the likelihood that another jurisdiction has 
regulatory oversight of an issuer, should we expand the jurisdictional 
scope of the required non-U.S. disclosure documents such that it 
includes all documents that the issuer has made or is required to make 
public under the law of any jurisdiction in its primary trading market? 
Should all documents, provided they are material, required to be 
published by an issuer pursuant to any governmental authority or stock 
exchange be included in the scope of non-U.S. disclosure documents?
     Where an issuer is organized in one jurisdiction and 
domiciled in another, should the issuer have to comply voluntarily with 
the obligations of both jurisdictions, or only one? If only one, should 
the issuer be permitted to elect which one or should the manner of 
choosing be specified by rule? If so, what standards should govern the 
decision?
     For both the conditions to claim and maintain the Rule 
12g3-2(b) exemption, should we require an issuer to publish 
electronically the types of information deemed to be material as 
specified in the proposed rule? Are there other types of information 
that should be expressly stated in the non-exclusive list of deemed 
material information? Are there types of information that should be 
excluded from the list of required material documents?
     For both the conditions to claim and maintain the Rule 
12g3-2(b) exemption, should we permit an issuer to publish its non-U.S. 
disclosure documents through an electronic information delivery system 
that is generally available to the public, even if that system is 
located outside of the issuer's primary trading market?
     Should we permit an issuer to satisfy the rule's 
electronic publication requirements concurrently with the publishing of 
its non-U.S. disclosure document through an electronic information 
delivery system that is generally publicly available in the issuer's 
primary trading market, as proposed? Should we also require the issuer 
to publish its non-U.S. document on its Internet Web site?
     Is it reasonable to expect that all electronic information 
delivery systems that are generally available to the public will be 
accessible and useable by U.S. investors? Should we require an issuer 
to publish its non-U.S. disclosure documents on its Internet Web site 
if the electronic delivery system is not navigable in English or 
requires users to register or pay a fee for access? Should we require 
an issuer to note on its Internet Web site that documents supplied to 
maintain the Rule 12g3-2(b) exemption are available on an electronic

[[Page 10111]]

delivery system, and provide a link to that system?
     Should we require an issuer to publish electronically an 
English translation of the specified non-U.S. documents, as proposed? 
Are there other documents that should be subject to an English 
translation requirement? Should we exclude any of the specified 
documents from the English translation requirement? Will a translation 
requirement into English inadvertently encourage issuers to provide the 
minimal level of disclosure in their primary trading market in order to 
limit the burden of translating such documents into English?
     Should we provide specific guidance regarding when an 
issuer may provide an English summary instead of a line-by-line English 
translation of a required non-U.S. disclosure document? For example, 
should we permit an issuer to provide English summaries of certain non-
U.S. documents, for example, interim reports, or sections of such 
reports, that do not contain financial statements, and other foreign 
language documents for which English summaries are permitted under 
cover of Form 6-K, as long as the English summaries are permitted by, 
and meet the requirements of Exchange Act Rule 12b-12(d)?\83\
---------------------------------------------------------------------------

    \83\ 17 CFR 240.12b-12(d).
---------------------------------------------------------------------------

     Should we require an issuer to publish electronically a 
non-U.S. document required to be filed with its non-U.S. regulator or 
non-U.S. exchange, but which is not made public by that non-U.S. 
regulator or non-U.S. exchange, if it is material to investors?
     Should we require an issuer to maintain the publishing of 
specified documents on its Internet Web site for a particular length of 
time? If so, which documents and for what length? For example, should 
we require an issuer to post its annual report on its Internet Web site 
for 1, 2 or 3 years, interim or current reports for 1 or 2 years, and 
press releases for 6 months or 1 year?
     Should we require an issuer to commence publishing 
electronically the required non-U.S. disclosure documents before the 
date that its Section 12(g) registration statement would be due, as a 
condition to the Rule 12g3-2(b) exemption?
     For the condition to maintain the Rule 12g3-2(b) 
exemption, should we require an issuer to publish electronically a 
required non-U.S. disclosure document promptly after the document has 
been published pursuant to its home jurisdiction laws, stock exchange 
rules, or shareholder rules and practices, as proposed? Should we 
instead provide a particular due date for the electronic publication of 
a specified document?
     Should the Commission permit or require an issuer to 
publish its non-U.S. disclosure documents on EDGAR or through another 
specified central electronic repository for documents instead of 
requiring the publishing of those documents on an issuer's Internet Web 
site or through an electronic information delivery system in its 
primary trading market?

E. Proposed Elimination of the Written Application Requirement

    Currently in order to obtain the Rule 12g3-2(b) exemption, if not 
proceeding under Rule 12h-6, a foreign private issuer must submit 
written materials, typically in the form of a letter application, to 
the Commission. These materials must include a list of the issuer's 
non-U.S. disclosure requirements, the number of U.S. holders of its 
subject securities and the percentage of outstanding shares held by 
them, the circumstances in which its U.S. holders acquired those 
securities, and the date and circumstances of the most recent public 
distribution of the securities of the issuer or its affiliate.\84\ As 
part of the written application, an issuer must also submit copies of 
its non-U.S. disclosure documents published since the first day of its 
most recently completed fiscal year.\85\ An issuer must submit this 
information, together with all of the supporting documents, in paper 
only.
---------------------------------------------------------------------------

    \84\ Exchange Act Rules 12g3-2(b)(1), (2) and (5). An issuer is 
also required to furnish a revised list of its non-U.S. disclosure 
requirements at the end of any fiscal year in which those 
requirements changed. Rule 12g3-2(b)(1)(iv) (17 CFR 240.12g3-
2(b)(1)(iv)).
    \85\ Exchange Act Rule 12g3-2(b)(1)(i).
---------------------------------------------------------------------------

    We are proposing to eliminate Rule 12g3-2(b)'s written application 
process for all foreign private issuers. As proposed, an issuer may 
claim the Rule 12g3-2(b) exemption as long as it satisfies the rule's 
conditions. This proposal is consistent with our adoption of an 
automatic grant of the Rule 12g3-2(b) exemption upon the effectiveness 
of an issuer's deregistration under Rule 12h-6. Moreover, since we are 
proposing to permit an issuer to claim the Rule 12g3-2(b) exemption 
based on a trading volume measure, regardless of the number of its U.S. 
shareholders, the current shareholder information requirement would be 
of marginal use. Further, since, as proposed, as a condition to 
claiming and maintaining the Rule 12g3-2(b) exemption, an issuer would 
have to publish electronically its non-U.S. disclosure documents, 
investors would be able to ascertain many of the issuer's non-U.S. 
disclosure requirements from a review of those publicly available 
documents.\86\
---------------------------------------------------------------------------

    \86\ From time to time, the Commission has published a list of 
issuers claiming the Rule 12g3-2(b) exemption that have submitted 
relatively current information pursuant to that rule. See, for 
example, Release No. 34-51893 (June 21, 2005), 70 FR 37128 (June 28, 
2005). Commission staff has compiled this list based on a review of 
submitted paper documents. As part of the streamlining of the Rule 
12g3-2(b) process that the proposed rule amendments are intended to 
effect, the Commission anticipates it would no longer publish these 
lists subsequent to the effective date of the new rules.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed elimination of the written 
application process for the Rule 12g3-2(b) exemption.
     Should we permit an issuer, which has not terminated its 
registration and reporting obligations under Rule 12h-6, to claim the 
Rule 12g3-2(b) exemption as long as it meets the proposed rule's 
conditions, without submitting a written application to the Commission, 
as proposed?
     Should we continue to permit an issuer to claim the Rule 
12g3-2(b) exemption automatically upon the effectiveness of its 
deregistration under Rule 12h-6, as proposed?
     As a condition of claiming or maintaining the Rule 12g3-
2(b) exemption, should we require an issuer to publish, and to update 
as necessary, a list of its non-U.S. disclosure requirements on its 
Internet Web site or its primary trading market's electronic 
information delivery system?
     As a condition of claiming or maintaining the Rule 12g3-
2(b) exemption, should we require an issuer to publish electronically 
other information with respect to its eligibility for the Rule 12g3-
2(b) exemption, for example, identification of its non-U.S. primary 
market, and its U.S. trading volume as a percentage of its worldwide 
trading volume for its most recently completed fiscal year?
     What use do investors currently make of the information 
contained in an initial application under Rule 12g3-2(b)? Does it 
assist them in making informed investment decisions?
     If it is appropriate to eliminate the application process 
for the Rule 12g3-2(b) exemption, as proposed, should we at least 
require an issuer to notify the Commission that it is claiming the Rule 
12g3-2(b) exemption? If so, what form should the notification take? 
Would the filing of an amended Form F-6, as proposed, serve as 
sufficient notice for most issuers claiming the Rule 12g3-2(b) 
exemption?

[[Page 10112]]

     What effects, if any, would the proposed elimination of 
the written application requirement and the lack of a formal notice 
requirement have on other market participants, for example, broker-
dealers and their ability to fulfill their Rule 15c2-11 obligations to 
investors or facilitate the resale of a foreign company's securities to 
QIBs in the United States under Securities Act Rule 144A?

F. Proposed Duration of the Amended Rule 12g3-2(b) Exemption

    The proposed Rule 12g3-2(b) exemption would remain in effect for as 
long as a foreign private issuer satisfies the electronic publication 
condition, or until:
     The issuer no longer maintains a listing for the subject 
class of securities on one or more exchanges in its primary trading 
market;
     The average daily trading volume of the subject class of 
securities in the United States exceeds 20 percent of the average daily 
trading volume of that class of securities on a worldwide basis for the 
issuer's most recently completed fiscal year, other than the year in 
which the issuer first claims the exemption; or
     The issuer registers a class of securities under Section 
12 of the Act or incurs reporting obligations under Section 15(d) of 
the Act.\87\
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    \87\ Proposed Rule 12g3-2(d).

This proposed duration would apply to both non-reporting issuers as 
well as issuers claiming the Rule 12g3-2(b) exemption following their 
deregistration pursuant to Rule 12h-6, 12g-4, or 12h-3 or the statutory 
terms of Section 15(d).
    The proposed duration of the amended Rule 12g3-2(b) exemption is 
similar to the duration of the current exemption. Both depend on an 
issuer's continued compliance with the non-U.S. publication 
requirements. Under both provisions, Section 12 registration or the 
incurrence of Section 15(d) reporting obligations terminates the 
exemption.\88\ Moreover, currently, if an issuer can no longer claim 
the Rule 12g3-2(b) exemption because it has not complied with the 
rule's non-U.S. publication requirements, it must determine on the last 
day of the fiscal year whether, because of its record holder count, it 
must register a class of securities under Section 12(g). The same would 
hold true under the proposed rule amendments for a non-compliant 
issuer.
---------------------------------------------------------------------------

    \88\ See, for example, Exchange Act Rule 12g3-2(e)(3) (17 CFR 
240.12g3-2(e)(3)).
---------------------------------------------------------------------------

    As proposed, an issuer would lose the Rule 12g3-2(b) exemption if 
it no longer was listed on an exchange in its primary trading market. 
We believe this provision is necessary in order to help ensure the 
continued availability of a set of non-U.S. disclosure documents to 
which investors may turn when making decisions regarding an issuer's 
securities. We imposed a similar foreign listing condition when we 
adopted Rule 12h-6, although we did not explicitly provide that an 
issuer that ceased to meet the foreign listing condition would not be 
eligible to claim or maintain the Rule 12g3-2(b) exemption following 
its deregistration under Rule 12h-6. The proposed amendments would 
clarify that, because of the importance of the foreign listing 
requirement, any issuer that ceases to comply with that requirement 
would lose the Rule 12g3-2(b) exemption.
    Under the proposed rule amendments, if relying on Rule 12g3-2(b)'s 
20 percent trading volume standard, an issuer would have to determine 
at the end of each fiscal year, other than the year in which it first 
claims the exemption, whether it still met that standard, even if the 
issuer was in compliance with the non-U.S. publication requirements. We 
believe this treatment is warranted in order to protect investors. 
Moreover, trading volume information is more easily obtainable than 
information regarding a foreign private issuer's U.S. and worldwide 
shareholders, and the trading volume standard provides a more direct 
measure of relative U.S. market interest in an issuer's securities. An 
issuer would not have to make the trading volume determination for the 
fiscal year in which the issuer first claimed the exemption, however, 
in order to provide a reasonably long enough period to assess relative 
U.S. market interest for the issuer's securities.
Comment Solicited
    We solicit comment on the proposed duration of the Rule 12g3-2(b) 
exemption.
     Should an issuer be able to claim the Rule 12g3-2(b) 
exemption only for as long as it complies with the rule's non-U.S. 
publication requirement, as proposed?
     Should an issuer lose the Rule 12g3-2(b) exemption if its 
U.S. trading volume exceeds 20 percent of its worldwide trading volume 
for its most recently completed fiscal year, other than the year in 
which the issuer first claimed the exemption, even if the issuer has 
fully complied with Rule 12g3-2(b)'s non-U.S. jurisdiction publication 
requirement, as proposed? Should an issuer have to make the trading 
volume determination for the fiscal year in which the issuer first 
claims the exemption as well? Or should compliance with the rule's non-
U.S. publication and foreign listing requirements suffice as a basis 
for continuing the exemption, regardless of the relative U.S. trading 
volume of its securities?
     Should an issuer be able to claim the Rule 12g3-2(b) 
exemption only for as long as it maintains a listing in its primary 
trading market, as proposed? Should it instead be able to continue to 
claim the exemption if, despite being delisted in its primary trading 
market, it voluntarily continues to publish electronically the 
documents required by its former foreign exchange and its U.S. trading 
volume remains at 20 percent or less of its worldwide trading volume?
     Should an issuer no longer be able to claim the Rule 12g3-
2(b) exemption if it registers the same or a different class of 
securities under Exchange Act Section 12(g) or incurs reporting 
obligations as to such a class under Section 15(d), as proposed? Should 
an issuer instead be able to maintain the Rule 12g3-2(b) exemption for 
a class of equity securities if it incurs Section 15(d) reporting 
obligations regarding debt securities?
     Should other factors or conditions cause an issuer to lose 
the Rule 12g3-2(b) exemption? For example, if an issuer sells a 
significant percentage of its equity securities to U.S. investors in 
one or more exempt transactions during a specified period of time, such 
as six months or a year, should it be able to continue to claim the 
Rule 12g3-2(b) exemption as long as its U.S. trading volume does not 
exceed 20 percent of its worldwide trading volume at the end of that 
year? Is there a point when the percentage of outstanding shares owned 
by U.S. investors becomes as or more important than relative U.S. 
trading volume as a measure of U.S. market interest for determining the 
duration of the Rule 12g3-2(b) exemption? If so, what is that point?

G. Proposed Elimination of the Successor Issuer Prohibition

    Currently an issuer may not obtain the Rule 12g3-2(b) exemption if, 
following the issuance of shares to acquire by merger, consolidation, 
exchange of securities or acquisition of assets, it has succeeded to 
the Exchange Act reporting obligations of another issuer.\89\ The sole 
exception has been for

[[Page 10113]]

Canadian companies that registered the securities to be issued in the 
transaction on specified MJDS registration statements under the 
Securities Act.\90\
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    \89\ Exchange Act Rule 12g3-2(d)(2). An issuer succeeds to the 
Exchange Act reporting obligations of another either under Exchange 
Act Rule 12g-3 (17 CFR 240. 12g-3) or 15d-5 (17 CFR 240.15d-5).
    \90\ The specified MJDS registration statements are Forms F-8, 
F-9, F-10 and F-80 (17 CFR 239.38, 239.39, 239.40, and 239.41).
---------------------------------------------------------------------------

    As part of the 2007 rule amendments, we adopted a provision that 
permits a successor issuer to terminate its newly acquired Exchange Act 
reporting obligations as long as it meets Rule 12h-6's substantive 
requirements for equity or debt securities issuers.\91\ That provision 
permits a successor issuer to take into account the reporting history 
of its predecessor when determining whether it meets Rule 12h-6's prior 
reporting condition.\92\ Under that rule, a non-Exchange Act reporting 
foreign private issuer that has acquired a reporting foreign private 
issuer in a transaction exempt under the Securities Act, for example, 
under Rule 802 \93\ or Securities Act Section 3(a)(10),\94\ may qualify 
immediately for termination of its Exchange Act reporting obligations 
under Rule 12h-6, without having to file an Exchange Act annual report, 
as long as the acquired company's reporting history fulfills Rule 12h-
6's prior reporting condition and the successor issuer meets the rule's 
other conditions.
---------------------------------------------------------------------------

    \91\ 17 CFR 240.12h-6(d).
    \92\ Exchange Act Rule 12h-6(d)(2) (17 CFR 240.12h-6(d)(2)).
    \93\ Securities Act Rule 802 (17 CFR 230.802).
    \94\ 15 U.S.C. 77c(a)(10).
---------------------------------------------------------------------------

    When adopting Rule 12h-6's successor issuer provision, we amended 
Exchange Act Rule 12g3-2(d) to permit a successor issuer to claim the 
Rule 12g3-2(b) exemption upon the effectiveness of its termination of 
Exchange Act registration and reporting under Rule 12h-6. We see no 
reason to treat differently a successor issuer that qualifies for 
deregistration under one of the older exit rules or under Section 
15(d). Accordingly, we propose to eliminate the successor issuer 
provision in its entirety, which would permit a successor issuer to 
claim the Rule 12g3-2(b) exemption upon the effectiveness of its exit 
from the Exchange Act reporting regime whether under Rule 12h-6, 12g-4 
or 12h-3 or Section 15(d).
Comment Solicited
    We solicit comment on the proposed elimination of the successor 
issuer prohibition.
     Should we permit a successor issuer to claim the Rule 
12g3-2(b) exemption upon the effectiveness of its exit from the 
Exchange Act reporting regime under Rule 12g-4, Rule 12h-3 or Section 
15(d), as proposed?

H. Proposed Elimination of the Rule 12g3-2(b) Exception for MJDS Filers

     When the Commission adopted its Multijurisdictional Disclosure 
System (MJDS) for Canadian issuers, it amended Rule 12g3-2 to make the 
Rule 12g3-2(b) exemption available to Canadian issuers that have only 
filed with the Commission specified MJDS registration statements,\95\ 
although they may have filed those registration statements within the 
previous 18 months or to effect transactions in which they would 
succeed to Exchange Act reporting obligations.\96\ The reason for these 
exemptions was to encourage Canadian issuers to use the MJDS.\97\ 
Bercause the proposed amendments would eliminate the 18 month and 
successor issuer prohibitions under Rule 12g3-2(b), they would remove 
as unnecessary the MJDS filer exceptions to those prohibitions.
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    \95\ Release No. 33-6902 (June 21, 1991), 56 FR 30036 (July 1, 
1991). The MJDS generally permits a qualified Canadian issuer to 
file with the Commission its Canadian registration statements and 
reports under cover of the MJDS forms.
    \96\ Exchange Act Rules 12g3-2(d)(1) and (2).
    \97\ Release No. 33-6879 (October 22, 1990), 55 FR 462881 
(November 2, 1990), as adopted in Release No. 33-6902.
---------------------------------------------------------------------------

    When adopting the MJDS, the Commission also permitted a Canadian 
issuer that already had the Rule 12g3-2(b) exemption, but that 
subsequently acquired Exchange Act reporting obligations as a MJDS 
filer, for example, with regard to a class of debt securities, to 
retain the Rule 12g3-2(b) exemption for its equity securities. The 
Commission permitted that issuer to submit its non-U.S. disclosure 
documents simultaneously to fulfill its Exchange Act reporting 
obligations under the MJDS and its non-U.S. publication obligations 
under Rule 12g3-2(b). The Commission then amended Form 40-F \98\ and 
Form 6-K \99\ to require an issuer to disclose on the cover page that 
it was filing the form for that dual purpose.\100\ Under the current 
rules, a Canadian issuer that checks the appropriate box on the cover 
of each filed Form 40-F and submitted Form 6-K is able to use those 
Exchange Act reports to maintain its Rule 12g3-2(b) exemption as well.
---------------------------------------------------------------------------

    \98\ 17 CFR 249.240f. Form 40-F is the MJDS form used for the 
filing of an Exchange Act registration statement or annual report.
    \99\ Like non-MJDS foreign registrants, a MJDS filer uses Form 
6-K to submit its interim home jurisdiction documents.
    \100\ Release Nos. 33-6902 and 33-6879.
---------------------------------------------------------------------------

    This dual use of MJDS Exchange Act reports was reasonable at the 
time that the Commission adopted the MJDS since a Canadian issuer had 
to file or submit substantially the same Canadian disclosure documents 
for Exchange Act purposes as it did to maintain the Rule 12g3-2(b) 
exemption. However, this is no longer the case. Since the enactment of 
the Sarbanes-Oxley Act,\101\ and Commission rules adopted under that 
Act, Canadian issuers must respond to several U.S. disclosure 
requirements when preparing their Form 40-F annual reports.\102\
---------------------------------------------------------------------------

    \101\ Pub. L. 107-204, 116 Stat. 745 (2002).
    \102\ See, for example, Form 40-F's certifications required 
concerning an issuer's disclosure controls and procedures and its 
internal controls over financial reporting, and the disclosure 
required concerning its audit committee financial expert, its code 
of ethics, and its off-balance sheet arrangements.
---------------------------------------------------------------------------

     Accordingly, we are proposing to eliminate the current, but rarely 
used, ability of a Canadian company, which has Exchange Act reporting 
obligations solely from having filed an effective MJDS registration 
statement under the Securities Act, to claim simultaneously the Rule 
12g3-2(b) exemption. Under the proposed rule amendments, a MJDS 
registrant would be eligible to claim the Rule 12g3-2(b) exemption on 
the same grounds as other foreign registrants. If it has recently 
exited the Exchange Act reporting regime under Rule 12h-6, 12g-4 or 
12h-3 or Section 15(d), it could claim the exemption, assuming it 
satisfied the proposed rule amendments' other conditions. Otherwise, 
the filing of a MJDS registration statement under the Securities Act or 
Exchange Act would trigger Exchange Act reporting obligations and 
preclude that issuer from claiming the exemption.\103\
---------------------------------------------------------------------------

    \103\ The proposed amendments would remove the instruction on 
the cover page of Form 40-F and Form 6-K requiring a registrant to 
indicate whether it also was furnishing the materials pursuant to 
Rule 12g3-2(b).
---------------------------------------------------------------------------

Comment Solicited
     We solicit comment on the proposed elimination of the Rule 12g3-
2(b) exception for MJDS filers.
     Should we eliminate the ability of a MJDS issuer to claim 
the Rule 12g3-2(b) exemption while having Exchange Act reporting 
obligations, as proposed?

I. Proposed Elimination of the ``Automated Inter-Dealer Quotation 
System'' Prohibition and Related Grandfathering Provision

     Under the existing rules, a foreign private issuer generally may 
not claim the Rule 12g3-2(b) exemption if it has securities or ADRs 
quoted in the United States on an automated inter-dealer quotation 
system,\104\ which, until recently, referred to the inter-dealer 
quotation system administered by the National Association of Securities

[[Page 10114]]

Dealers Inc., and known as Nasdaq. The Commission adopted this 
prohibition in 1983 because of its belief that, since its establishment 
in 1971, Nasdaq had so matured into a trading system with substantial 
similarities to a national securities exchange that Nasdaq-traded 
companies should be required to meet the same disclosure standards as 
exchange-traded companies.\105\ We are proposing to eliminate this 
prohibition because Nasdaq has since become a national securities 
exchange.\106\
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    \104\ Exchange Act Rule 12g3-2(d)(3) (17 CFR 240.12g3-2(d)(3)).
    \105\ Release No. 34-20264 (October 6, 1983), 48 FR 46736 
(October 14, 1983).
    \106\ Nasdaq ceased operations as an automated inter-dealer 
quotation system and became a national securities exchange effective 
August 1, 2006. See Release No. 34-53128 (January 13, 2006), 71 FR 
3550 (January 23, 2006).
---------------------------------------------------------------------------

     When the Commission adopted the automatic inter-dealer quotation 
system prohibition, it recognized that the general prohibition could 
cause some Nasdaq-quoted foreign companies that already had obtained 
the Rule 12g3-2(b) exemption to withdraw from Nasdaq. Therefore, the 
Commission excepted from that prohibition securities that:
     Were quoted on Nasdaq on October 5, 1983 and have been 
continuously traded since;
     were exempt under Rule 12g3-2(b) on October 5, 1983 and 
have remained so since; and
     after January 2, 1986, were issued by a non-Canadian 
company.\107\
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    \107\ Exchange Act Rule 12g3-2(d)(3). The Commission based the 
more limited grandfathering of Canadian securities on the more 
active U.S. market for those securities, which had led to abuses 
under Rule 12g3-2(b). Release No. 34-20264.
---------------------------------------------------------------------------

     Since the adoption of this grandfathering provision, only nine of 
the grandfathered issuers remain listed on Nasdaq.\108\ Pursuant to 
Commission order, Nasdaq is now a national securities exchange, and 
these issuers must register their securities under Exchange Act Section 
12(b) \109\ by August 1, 2009 if they wish to remain listed on 
Nasdaq.\110\ Given these developments, we no longer believe it is 
necessary to maintain the grandfathering provision for those Nasdaq-
listed companies. Pursuant to the terms of the Commission order, as 
long as the nine grandfathered issuers continue to comply with the 
conditions of Rule 12g3-2(b), brokers and dealers may trade their 
securities in reliance on the Rule 12g3-2(b) exemption until the above 
deadline for Exchange Act registration.
---------------------------------------------------------------------------

    \108\ Letter from Edward S. Knight to Nancy M. Morris (July 31, 
2006), attached to Release No. 34-54240 (July 31, 2006), 71 FR 45246 
(August 8, 2006).
    \109\ 15 U.S.C. 78l(b).
    \110\ Release No. 34-54241 (July 31, 2006), 71 FR 45359 (August 
8, 2006). The Commission granted the grandfathered issuers an 
additional three years to register their securities under Section 
12(b) in order to avoid disruptions in the trading of their 
securities caused by their delisting from Nasdaq and to provide them 
with time to meet U.S. disclosure requirements.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed elimination of Rule 12g3-2(b)'s 
automatic inter-dealer quotation system prohibition and related 
grandfathering provision.
     Should we eliminate the automatic inter-dealer quotation 
system prohibition, as proposed?
     Are there alternative trading systems or other non-
exchange trading platforms that raise similar concerns as those that 
caused the Commission to adopt the Nasdaq-focused automatic inter-
dealer quotation system prohibition? If so, should we prohibit an 
issuer whose securities are traded on those non-exchange systems from 
relying on the Rule 12g3-2(b) exemption?
     Should we eliminate the grandfathering provision to Rule 
12g3-2(b)'s automatic inter-dealer quotation system prohibition, as 
proposed?

J. Proposed Revisions to Form F-6

    We propose to make one revision to Form F-6, the registration 
statement used to register ADRs under the Securities Act. Currently a 
registrant of ADRs must state on Form F-6 that the issuer of the 
deposited securities against which the ADRs will be issued is either an 
Exchange Act reporting company or furnishes public reports and other 
documents to the Commission pursuant to Rule 12g3-2(b). The proposed 
revision would require a Form F-6 registrant to state that, if the 
issuer of deposited securities is not an Exchange Act reporting 
company, such issuer publishes information in English required to 
maintain the Rule 12g3-2(b) exemption on its Internet Web site or 
through an electronic information delivery system generally available 
to the public in its primary trading market. The registrant would also 
have to disclose the issuer's address of its Internet Web site or the 
electronic information delivery system in its primary trading 
market.\111\
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    \111\ Proposed amended Part I, Item 2 of Form F-6.
---------------------------------------------------------------------------

    Currently an ADR facility may be either sponsored or 
unsponsored.\112\ Under our current regulations, in order for a 
depositary bank to establish an ADR facility with respect to the shares 
of a specific foreign private issuer, the issuer must either be an 
Exchange Act reporting company or furnish public reports and other 
documents to the Commission pursuant to Rule 12g3-2(b). As a result, a 
foreign private issuer that does not seek to have its securities traded 
in the United States in the form of ADRs is able, by not formally 
claiming the Rule 12g3-2(b) exemption and submitting documents to the 
Commission, to restrict the ability of ADR depositary banks to 
establish an unsponsored ADR facility.
---------------------------------------------------------------------------

    \112\ With a sponsored facility, the issuer of the deposited 
securities is a party to the deposit agreement along with the 
depositary and is able to exercise some control regarding the terms 
and operations of the facility. With an unsponsored facility, the 
depositary solely controls the terms and operations of the facility.
---------------------------------------------------------------------------

    We are not proposing to revise our requirement under Form F-6 that 
the issuer of the deposited securities be either an Exchange Act 
reporting company or be exempt from registration under Rule 12g3-2(b). 
Because we are proposing to expand the availability of the Rule 12g3-
2(b) exemption so that it will be available to all otherwise eligible 
foreign private issuers that post materials to their Web sites or make 
them available through an electronic information delivery system in 
their primary trading market, ADR depositaries will be able to 
establish unsponsored ADRs on this expanded group of foreign private 
issuers. ADR depositaries will also be able to establish sponsored ADR 
facilities with foreign private issuers that choose to have their 
shares represented by ADRs in the United States.
Comment Solicited
     Should we require a Form F-6 registrant to disclose on 
Form F-6 that, if the issuer of deposited securities is not an Exchange 
Act reporting company, such issuer electronically publishes the 
documents required to maintain the Rule 12g3-2(b) exemption, and to 
provide the address of the issuer's Internet Web site or electronic 
information delivery system in its primary trading market, as proposed?
     Should we clarify the proposed requirement that a 
registrant that already has an effective Form F-6 for either a 
sponsored or unsponsored facility has to disclose the address where the 
issuer of the underlying securities has electronically published its 
non-U.S. disclosure documents under Rule 12g3-2(b) when the registrant 
files its first post-effective amendment to the Form F-6 following the 
effective date of the proposed rule amendments, as intended?
     Should we delete the requirement under Form F-6 that the 
foreign private issuer whose securities are to be represented by an ADR 
be an Exchange

[[Page 10115]]

Act reporting company or be exempt from registration under Rule 12g3-
2(b)?
     As a condition to the registration of ADRs on Form F-6 
relating to the shares of a foreign private issuer, should we require 
that the issuer give its consent to the depositary? Should we require 
that the depositary have notified the foreign private issuer of its 
intention to register ADRs and have either received an affirmative 
statement of no objection from the issuer or not received an 
affirmative statement of objection from the issuer?

K. Proposed Amendment of Exchange Act Rule 15c2-11

    Exchange Act Rule 15c2-11 \113\ contains requirements that are 
intended to deter broker-dealers from initiating or resuming quotations 
for covered over-the-counter securities that may facilitate a 
fraudulent or manipulative scheme. The Rule currently prohibits a 
broker-dealer from publishing (or submitting for publication) a 
quotation for a covered over-the-counter security in a quotation medium 
unless it has obtained and reviewed current information about the 
issuer.\114\ One of the specified types of information required by Rule 
15c2-11 is information furnished to the Commission pursuant to Rule 
12g3-2(b). A broker-dealer must make this information reasonably 
available upon request to any person expressing an interest in a 
proposed transaction involving the security with the broker-
dealer.\115\
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    \113\ 17 CFR 240.15c2-11.
    \114\ Rule 15c2-11(a) (17 CFR 240.15c2-11(a)). The broker-dealer 
must also have a reasonable basis for believing that the issuer 
information, when considered along with any supplemental 
information, is accurate and is from a reliable source.
    \115\ Rule 15c2-11(a)(4).
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    We propose to amend Rule 15c2-11 to conform to the proposed rule 
amendments so that a broker-dealer must have available the information 
that, since the beginning of its last fiscal year, the issuer has 
published in order to maintain the Rule 12g3-2(b) exemption. Because 
some issuers currently still make paper submissions to maintain their 
Rule 12g3-2(b) exemption, we expect that, during the first year of the 
amended rules' effectiveness, a broker-dealer may have to resort to 
both paper submissions and electronically published materials in order 
to fulfill its Rule 15c2-11 obligations regarding a particular issuer. 
Eventually, however, a broker-dealer will only have to look to an 
issuer's electronically published materials for the purpose of Rule 
15c2-11.
    The proposed amended Rule 15c2-11 would still require a broker-
dealer to make reasonably available upon request the information 
published pursuant to Rule 12g3-2(b). However, a broker-dealer would be 
able to satisfy this requirement by providing the requesting person 
with appropriate instructions regarding how to obtain the information 
electronically. This reflects our view that most investors will have 
ready access to the electronically published documents of Rule 12g3-
2(b)-exempt issuers.
Comment Solicited
    We solicit comment on the proposed amendments to Rule 15c2-11.
     Should we require a broker-dealer to have available the 
information published by an issuer to maintain the Rule 12g3-2(b) 
exemption, as proposed?
     Should we continue to require a broker-dealer to make this 
information reasonably available upon request, as proposed? Should a 
broker-dealer be able to satisfy this requirement by providing 
appropriate instructions regarding how to obtain the information 
electronically, as intended?

L. Proposed Transition Periods

1. Regarding Section 12 Registration
    While we believe most issuers that currently have the Rule 12g3-
2(b) exemption will continue to be able to claim the exemption upon the 
effectiveness of the proposed rule amendments, some may not be able to 
do so because their U.S. trading volume exceeded 20 percent of their 
worldwide trading volume on the last day of their most recently 
completed fiscal year. Those issuers would have to file a Section 12 
registration statement if they are unable to meet all of the amended 
rule's conditions. In order to provide those issuers with sufficient 
time to prepare for and complete the Section 12 registration process, 
including obtaining required audited financial statements, we are 
proposing to require that those issuers become Exchange Act registrants 
no later than three years from the effective date of the proposed rule 
amendments.\116\
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    \116\ We adopted a similar three-year transition period to 
enable those grandfathered Nasdaq-traded foreign companies that were 
Rule 12g3-2(b)-exempt to register under Section 12(b) after Nasdaq 
became an exchange. See  Release No. 34-54241 (July 31, 2006), 71 FR 
45359 (August 8, 2006).
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    We believe this proposed three-year transition period is necessary 
for the benefit not just of issuers, but of broker-dealers and 
investors as well. If a currently exempt issuer is unable to claim the 
Rule 12g3-2(b) exemption upon the effectiveness of the proposed 
amendments because it cannot satisfy the trading volume threshold, but 
meets the amended rule's other conditions, it may continue to rely on 
the exemption during the transition period as long as it complies with 
the electronic publishing and other conditions, except for the trading 
volume condition, required to maintain the exemption. Accordingly, 
during this transition period, a broker-dealer would be able to rely on 
that issuer's electronic postings to meet its Rule 15c2-11 obligations 
to investors and to facilitate resales of that issuer's securities in 
Rule 144A transactions.
Comment Solicited
    We solicit comment on the proposed three-year transition period.
     Should we adopt a three-year transition period for 
currently-exempt issuers that cannot claim the Rule 12g3-2(b) exemption 
on the effective date of the rule amendments, as proposed?
     Should we instead adopt a shorter transition period, such 
as a one or two-year transition period? Should we adopt a longer 
transition period, such as a four or five-year period? Should we not 
adopt any transition period?
2. Regarding Processing of Paper Submissions
    Although the 2007 amendments permitted an issuer that received the 
Rule 12g3-2(b) exemption upon application to the Commission to publish 
electronically its non-U.S. disclosure documents required to maintain 
the exemption, many issuers still submit those documents in paper. The 
Commission continues to process those paper documents and make them 
publicly available in the Public Reference Room at its Washington, DC 
headquarters.
    We expect that, following the effectiveness of the proposed rule 
amendments, some Rule 12g3-2(b)-exempt companies will continue to 
submit their non-U.S. disclosure documents in paper to the Commission 
either because they are unaware of the amendments or lack electronic 
publishing capabilities. Because there may be some investors who 
currently do not have ready access to the Internet, we are proposing to 
continue to process paper Rule 12g3-2(b) submissions and make them 
publicly available in the Public Reference Room for three months 
following the effectiveness of the rule amendments. Thereafter, the 
Commission will no longer process paper Rule 12g3-2(b) submissions. An 
issuer that continues to make Rule 12g3-2(b) submissions in paper after

[[Page 10116]]

this three-month period, and does not publish the submitted documents 
electronically as required, would no longer be able to claim the Rule 
12g3-2(b) exemption.
    We anticipate that three months would be sufficient time for all 
Rule 12g3-2(b)-exempt issuers to develop the capabilities to publish 
electronically their non-U.S. disclosure documents. We further 
anticipate that the proposed three-month transition period would be 
sufficient to permit investors and other interested persons to 
determine how and where to access those electronically published 
documents.
Comment Solicited
    We solicit comment on the proposed three-month transition period 
for the processing of paper Rule 12g3-2(b) submissions.
     Is a transition period necessary to provide issuers with 
sufficient time to publish electronically their non-U.S. disclosure 
documents required under Rule 12g3-2(b) or to enable investors to learn 
how to access those electronically published documents?
     If so, would the three-month transition period be 
sufficent? Should it be less than three months, such as one month, or 
two months? Should it be longer than three months, such as six months 
or one year?

M. Revisions to Form 15

    As part of the 2007 amendments, we revised Exchange Act Rules 12g-4 
and 12h-3, the older exit rules, by eliminating foreign private issuer 
provisions that were no longer needed because of the adoption of Rule 
12h-6, and by renumbering the remaining provisions accordingly.\117\ 
However, we did not correspondingly revise the cover page of Form 15, 
which requires an issuer to indicate under which provision of Rule 12g-
4 or 12h-3 it is terminating its Section 12(g) registration or 
suspending its Section 15(d) reporting obligations. Because Form 15 
refers to the pre-March 2007 version of Rules 12g-4 and 12h-3, it has 
understandably engendered some confusion among issuers seeking to file 
the form. We are today adopting revisions to the cover page of Form 15 
to reflect the current version of Rules 12g-4 and 12h-3.\118\
---------------------------------------------------------------------------

    \117\ The March 2007 amendments eliminated Exchange Act Rules 
12g-4(a)(2)(i) and (ii) (17 CFR 240.12g-4(a)(2)(i) and (ii)) and 
Rules 12h-3(b)(2)(i) and (ii) (17 CFR 240.12h-3(b)(2)(i) and (ii)), 
and renumbered Rule 12g-4(a)(1)(i) and (ii) as Rule 12g-4(a)(1) and 
(2) (17 CFR 240.12g-4(a)(1) and (2)).
    \118\ As amended, Form 15's cover page refers to Exchange Act 
Rule 12g-4(a)(1) or (2) and Rule 12h-3(b)(1)(i) or (ii), in addition 
to Rule 15d-6 (17 CFR 240.15d-6), which remains unchanged. We are 
adopting these revisions today without soliciting comment because 
they involve solely a technical matter that does not give rise to 
any substantive change in the Commission's rules.
---------------------------------------------------------------------------

General Request for Comments
    We solicit comment on the proposed amendments to Rule 12g3-2(b), 
(c), (d), (e), and (f), Rule 15c-2(11), and Forms F-6, 40-F, 6-K, and 
15F, as well as to all other aspects of the proposed rule amendments. 
Here and throughout the release, when we solicit comment, we are 
interested in hearing from all interested parties, including members 
and representatives of the investing public, representatives of foreign 
companies and foreign industry groups, representatives of broker-
dealers, domestic issuers, and other participants in U.S. securities 
markets. We are further interested in learning from all parties what 
aspects of the proposed rule amendments they deem essential, what 
aspects they believe are preferred but not essential, and what aspects 
they believe should be modified.

III. Paperwork Reduction Act Analysis

    This rule proposal contains ``collection of information'' 
requirements within the meaning of the Paperwork Reduction Act of 1995 
(``PRA'').\119\ We are submitting our proposal to the Office of 
Management and Budget (``OMB'') for review in accordance with the 
PRA.\120\ The title of the affected collections of information are 
submissions under Exchange Act Rule 12g3-2 (OMB Control No. 3235-0119) 
and Securities Act Form F-6 (OMB Control No. 3235-0292). An agency may 
not conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number. Compliance with the proposed amendments to Rule 12g3-2 
and Form F-6 will be mandatory.
---------------------------------------------------------------------------

    \119\ 44 U.S.C. 3501, et seq.
    \120\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

    Exchange Act Rule 12g3-2 is an exemptive rule that, under paragraph 
(b) of that rule, provides an exemption from Exchange Act section 12(g) 
registration for a foreign private issuer that, on an ongoing basis, 
either submits copies of its material non-U.S. disclosure documents to 
the Commission in paper or publishes those documents on its Internet 
Web site or through an electronic information delivery system in its 
primary trading market. We adopted paragraph (b) of Rule 12g3-2 in 
order to provide information for U.S. investors concerning foreign 
private issuers with limited securities trading in U.S. capital 
markets.
    Securities Act Form F-6 is the form used to register American 
Depositary Receipts (``ADRs''), which are a special type of security 
issued by a U.S. bank, representing a specified amount of securities 
issued by a foreign company that are deposited with the bank. We 
adopted Form F-6 in order to provide investors with information 
concerning a foreign company's ADRs, as disclosed in the deposit 
agreement, which must be attached as an exhibit to the Form F-6.
    The hours and costs associated with making submissions under 
Exchange Act Rule 12g3-2(b) and preparing, filing and sending Form F-6 
constitute reporting and cost burdens imposed by those collections of 
information. We based our estimates of the effects that the proposed 
rule amendments would have on those collections of information 
primarily on our review of the most recently completed PRA submissions 
for Rule 12g3-2(b) documents and Form F-6, on the particular 
requirements for those submissions and form, and on other information, 
for example, concerning relative U.S. trading volume for foreign 
private issuers whose equity securities trade in the U.S. over-the-
counter market.
    The proposed amendments to Exchange Act Rule 12g3-2 would permit a 
foreign private issuer to claim the Rule 12g3-2(b) exemption, without 
having to submit paper copies of written materials to the Commission, 
if, among other requirements, its U.S. average daily trading volume has 
been no greater than 20 percent of its worldwide average trading volume 
for its most recently completed fiscal year. The proposed amendments 
would require a qualifying issuer to publish on an ongoing basis copies 
of its non-U.S. disclosure documents required by Rule 12g3-2(b) on its 
Internet Web site, or through an electronic information delivery system 
in its primary trading market, instead of permitting their submission 
in paper to the Commission.
    The proposed amendments of Form F-6 would require a registrant to 
state that the issuer of the deposited securities, which is not an 
Exchange Act reporting company, publishes information in English 
required to maintain the Rule 12g3-2(b) exemption on the issuer's 
Internet Web site or through its primary trading market's electronic 
information delivery system. The proposed amendments would also require 
the registrant to disclose the address of the issuer's Internet Web 
site or electronic information delivery system. A registrant that 
already has an effective Form F-6 would have to disclose the address of 
where the issuer electronically publishes its non-U.S.

[[Page 10117]]

disclosure documents under Rule 12g3-2(b) when the registrant first 
amends its Form F-6 following the effective date of the proposed rule 
amendments.
    We have prepared the annual burden and cost estimates of the 
proposed rule amendments on Rule 12g3-2(b) submissions or publications 
and Form F-6 based on the following current estimates and assumptions:
     A foreign private issuer incurs 75% of the burden required 
to produce each Rule 12g3-2(b) submission or publication, excluding the 
initial application for the Rule 12g3-2(b) exemption and English 
translation work, and 25% of the burden required to perform work for 
the initial application and English translation for the Rule 12g3-2(b) 
submissions or publications;
     Outside firms, including legal counsel, accountants and 
other advisors satisfy 25% of the burden required to produce each Rule 
12g3-2(b) submission or publication, not including the initial 
application for the Rule 12g3-2(b) exemption and English translation 
work, at an average cost of $400 per hour, 75% of the burden required 
to produce the initial application at an average cost of $400 per hour, 
and 75% of the burden resulting from English translation work at an 
average cost of $125 per hour;
     English translation work constitutes on average 25% of the 
total work required for the Rule 12g3-2(b) submissions;
     A registrant satisfies 25% of the burden required to 
produce each Form F-6; and
     Outside firms, including legal counsel, accountants and 
other advisors, satisfy 75% of the burden required to produce each Form 
F-6 at an average cost of $400 per hour.

A. Rule 12g3-2(b) Submissions or Publications

    We estimate that, under current Rule 12g3-2(b), on an annual basis:
     1,036 foreign private issuers claim the Rule 12g3-2(b) 
exemption;
     Each issuer makes on average 12 submissions or 
publications, for a total of 12,432 submissions or publications under 
Rule 12g3-2(b);
     Production of those Rule 12g3-2(b) submissions or 
publications requires a total of 49,728 burden hours, or an average of 
4 burden hours per submission or publication (for all work performed by 
foreign private issuers and outside firms);
     Of those total burden hours, 13,700 hours result from work 
incurred by 685 issuers to produce their initial Rule 12g3-2(b) 
applications;\121\
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    \121\ We previously estimated that 685 issuers obtained the Rule 
12g3-2(b) exemption before the adoption of Rule 12h-6, which 
eliminated the application process for issuers that deregister 
pursuant to that new rule. See Release No. 34-55540. All of the 685 
issuers obtained the Rule 12g3-2(b) exemption after having submitted 
a letter application to the Commission. Based on a review of several 
Rule 12g3-2(b) applications, and an assessment of Rule 12g3-2(b)'s 
requirements and current practice, we estimate that it takes 
approximately 20 hours on average to complete a Rule 12g3-2(b) 
letter application. 685 x 20 hrs. = 13,700 hrs.
---------------------------------------------------------------------------

     Foreign private issuers incur a total of 25,943 burden 
hours \122\ to produce the Rule 12g3-2(b) submissions or publications, 
or an average of 2.1 burden hours per submission or publication;\123\ 
and
---------------------------------------------------------------------------

    \122\ 49,728 hrs. - 13,700 hrs. = 36,028 hrs. for work excluding 
application work. 36,028 hrs. x .25 = 9,007 hrs. for English 
translation work. 36,028 hrs. - 9,007 hrs. = 27,021 hrs. x .75 = 
20,266 hrs. for non-English translation work. 9,007 hrs. x .25 = 
2,252 hrs. for English translation work. 13,700 hrs. x .25 = 3,425 
hrs. for application work. 20,266 hrs. + 2,252 hrs. + 3,425 hrs. = 
25,943 hrs. for total work performed by foreign private issuers. 
25,943 hrs./12,432 = 2.1 hrs per submission or publication.
    \123\ The last OMB submission for Rule 12g3-2(b) reported 31,080 
burden hours for foreign private issuers. Our current estimate of 
25,943 burden hours is due to our assessment of the average annual 
burden hours required to produce written applications under Rule 
12g3-2(b), most of which are incurred by outside firms. We are 
treating the decrease in hours as an adjustment to the previous PRA 
burden estimate for Rule 12g3-2(b).
---------------------------------------------------------------------------

     Outside firms perform service at a total cost of 
$7,656,375 \124\ to produce the Rule 12g3-2(b) submissions or 
publications.\125\
---------------------------------------------------------------------------

    \124\ 27,021 hrs. x .25 = 6,755 hrs. x $400/hr. = $2,702,000 for 
non-English translation work. 9,007 hrs. x .75 = 6,755 hrs. x $125/
hr. = $844,375 for English translation work. 13,700 hrs. x .75 = 
10,275 hrs. x $400/hr. = $4,110,000 for application work. $2,702,000 
+ $844,375 + $4,110,000 = $7,656,375 for total work performed by 
outside firms.
    \125\ The last OMB submission for Rule 12g3-2(b) reported 
$4,895,100 in total costs for outside firms. Our current estimate of 
$7,656,375 is due to the previously noted assessment of the average 
annual burden hours required to produce written applications under 
Rule 12g3-2(b). We are treating the increase in costs as an 
adjustment to the previous PRA cost estimate for Rule 12g3-2(b).
---------------------------------------------------------------------------

    We estimate that, on an annual basis, approximately 150 additional 
foreign private issuers could claim the Rule 12g3-2(b) exemption as a 
result of the proposed amendments to Rule 12g3-2. This increase in the 
number of Rule 12g3-2(b) exempt issuers would cause:
     The number of issuers claiming the Rule 12g3-2(b) 
exemption to total 1,186;
     The number of Rule 12g3-2(b) publications to total 
14,232;\126\
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    \126\ 1,186 x 12 hrs. = 14,232.
---------------------------------------------------------------------------

     The number of burden hours required to produce these Rule 
12g3-2(b) publications to total 53,928;\127\
---------------------------------------------------------------------------

    \127\ 14,232 hrs. x 4 = 56,928 hrs. 150 x 20hrs. = 3,000 hrs. 
saved by the elimination of the written application requirement. 
56,928 hrs. - 3,000 hrs. = 53,928 hrs.
---------------------------------------------------------------------------

     The number of burden hours incurred by foreign private 
issuers to produce the Rule 12g3-2(b) publications to total 33,706 
hours, or 2.4 burden hours per publication;\128\ and
---------------------------------------------------------------------------

    \128\ 53,928 hrs. x .25 = 13,482 hrs. for English translation 
work. 53,928 hrs. - 13,482 hrs. = 40,446 hrs.; 40,446 hrs. x .75 = 
30,335 hrs. for non-English translation work; 13,482 hrs. x .25 = 
3,371 hrs. for English translation work; 30,335 hrs. + 3,371 hrs. = 
33,706 total hrs. incurred by foreign private issuers. 33,706 hrs./
14,232 = 2.4 hrs. per publication. Of the 33,706 hrs., + 7,763 hrs. 
result from the proposed rule change and -5,137 hrs. result from the 
previously noted program adjustment. 7,763 hrs. - 5,137 hrs. = a net 
increase of 2,626 hrs. from the previous PRA estimate for Rule 12g3-
2(b).
---------------------------------------------------------------------------

     Outside firms perform services at a total cost of 
$5,308,800 to produce the Rule 12g3-2(b) publications.\129\
---------------------------------------------------------------------------

    \129\ 40,446 hrs. x .25 = 10,112 hrs. x $400/hr. = $4,044,800 
for non-English translation work; 13,482 hrs. x .75 = 10,112 hrs. x 
$125/hr. = $1,264,000 for English translation work; $4,044,800 + 
$1,264,000 = $5,308,800 for total costs incurred by outside firms. 
Of the total costs, - $2,347,575 result from the proposed rule 
change and + $2,761,275 result from the previously noted program 
adjustment. $2,761,275 - $2,347,575 = a net increase of $413,700 
from the previous PRA estimate for Rule 12g3-2(b).
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B. Form F-6

    We currently estimate that, on an annual basis:
     150 registrants file Form F-6;
     Each registrant files one Form F-6, for a total of 150 
Form F-6s;
     Production of these Form F-6s requires 150 burden hours, 
or one burden hour per Form F-6 (for all work performed by registrants 
and outside firms);
     Of those total hours, registrants incur 38 hours to 
produce the Form F-6s, or an average of .25 hours per Form F-6;\130\ 
and
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    \130\ 150 hrs. x .25 = 38 hrs.
---------------------------------------------------------------------------

     Outside firms perform services at a total cost of $45,000 
to produce the Form F-6s.\131\
---------------------------------------------------------------------------

    \131\ 150 hrs. x .75 x $400/hr. = $45,000.
---------------------------------------------------------------------------

    We estimate that, on an annual basis, approximately 150 additional 
registrants could file Form F-6 as a result of the proposed rule 
amendments. We further estimate that, as a result of the proposed rule 
amendments, the burden required to produce each Form F-6 would increase 
by .5 hours. This increase in the number of Form F-6s and burden hours 
would cause:
     The number of Form F-6s filed to increase by 150 for a 
total of 300;
     The total hours required to produce the Form F-6s to 
increase by 225 hours

[[Page 10118]]

for a total of 375 hours, or 1.25 hours per Form F-6;\132\
---------------------------------------------------------------------------

    \132\ For the additional 150 filers: 150 x 1.5 hrs. = 225 hrs., 
225 hrs. + 150 hrs. = 375 hrs., 375 hrs./300 = 1.25 hrs. per Form F-
6.
---------------------------------------------------------------------------

     The number of burden hours incurred by registrants to 
produce the Form F-6s to increase by 56 hours to 94 hours, or .33 hours 
per Form F-6;\133\ and
---------------------------------------------------------------------------

    \133\ 375 hrs. x .25 = 94 hrs., 94 hrs. - 38 hrs. = 56 hrs., 94 
hrs./300 = .31 hr. per Form F-6.
---------------------------------------------------------------------------

     Outside firms to perform services at a total cost of 
$112,400 (an increase of $67,400) to produce the Form F-6s.\134\
---------------------------------------------------------------------------

    \134\ 375 hrs. x .75 = 281 hrs. x $400/hr. = $112,400. $112,400 
- $45,000 = $67,400.
---------------------------------------------------------------------------

IV. Cost-Benefit Analysis

A. Expected Benefits

    The proposed rule amendments are designed to encourage more foreign 
companies with relatively limited U.S. market interest to claim the 
Rule 12g3-2(b) exemption, and thereby publish on the Internet material 
documents in English, enhancing the ability of U.S. investors to trade 
equity securities of such companies in the U.S. over-the-counter 
market. The Rule 12g3-2(b) exemption permits a foreign company to have 
established an ADR facility under which its equity securities are 
traded as ADRs in the U.S. over-the-counter market for the convenience 
of U.S. investors, even if its U.S. investors exceed the Section 12(g) 
shareholder thresholds.\135\ The Rule 12g3-2(b) exemption also permits 
a foreign company to trade its equity securities in the form of 
ordinary shares through the U.S. over-the-counter market, makes it 
easier for broker-dealers to fulfill their obligations under Exchange 
Act Rule 15c2-11 to investors, and facilitates the resale of a foreign 
company's securities to qualified institutional buyers in the United 
States under Securities Act Rule 144A. By encouraging more foreign 
companies to claim the Rule 12g3-2(b) exemption, the proposed rule 
amendments should benefit investors by enhancing their ability to 
invest in foreign securities in the United States over-the-counter 
market.
---------------------------------------------------------------------------

    \135\ Use of an ADR facility makes it easier for a U.S. investor 
to collect dividends in U.S. dollars. Moreover, because the 
clearance and settlement process for ADRs generally is the same for 
securities of domestic companies that are traded in U.S. markets, a 
U.S. holder of an ADR is able to hold securities of a foreign 
company that trades, clears and settles within automated U.S. 
systems and within U.S. time periods.
---------------------------------------------------------------------------

    The proposed rule amendments would encourage more foreign companies 
to claim the Rule 12g3-2(b) exemption by reducing the costs of 
obtaining that exemption for foreign private issuers in two ways. 
First, the proposed amendments would enable an otherwise eligible 
issuer to claim the Rule 12g3-2(b) exemption, regardless of the number 
of its U.S. security holders, as long as the U.S. trading volume for 
its subject class of equity securities was no greater than ten percent 
of its worldwide trading volume for its most recently completed fiscal 
year. Currently Rule 12g3-2(b) requires an issuer to disclose the 
number of its U.S. security holders and the percentage of its 
outstanding securities held by them when applying for the Rule's 
exemption from Exchange Act registration.\136\ Since it is typically 
more difficult for a foreign company to calculate the number of its 
U.S. holders than to determine its relative U.S. trading volume, the 
proposed rule amendments should make it easier for more foreign 
companies to determine whether they qualify for the exemption.
---------------------------------------------------------------------------

    \136\ An issuer must also currently recalculate the number of 
its U.S. security holders when applying for reinstatement of the 
Rule 12g3-2(b) exemption should it lose that exemption due to non-
compliance with the Rule's ongoing home jurisdiction disclosure 
requirements.
---------------------------------------------------------------------------

    Second, the proposed rule amendments would eliminate the current 
written application process that requires an issuer to submit in paper 
specified information concerning, for example, its non-U.S. disclosure 
requirements, along with paper copies of its non-U.S. disclosure 
documents published since the beginning of its last fiscal year. Since 
outside law firms typically perform most of the work required for the 
application, the proposed rule amendments should reduce Rule 12g3-2(b) 
costs for foreign companies and encourage more of them to claim the 
Rule 12g3-2(b) exemption.
    The proposed rule amendments would further benefit investors by 
requiring any foreign company that claims the Rule 12g3-2(b) exemption 
to publish in English specified non-U.S. disclosure documents on its 
Internet Web site or through an electronic information delivery system 
that is generally available to the public in its primary trading 
market. Currently an issuer that has obtained the Rule 12g3-2(b) 
exemption upon application may submit its non-U.S. documents on an 
ongoing basis in paper to the Commission. By requiring the electronic 
publication in English of specified non-U.S. documents for any issuer 
claiming the Rule 12g3-2(b) exemption, the proposed amendments should 
make it easier for U.S. investors to gain access to a foreign private 
issuer's material non-U.S. disclosure documents and make better 
informed decisions regarding whether to invest in that issuer's equity 
securities.

B. Expected Costs

    Investors could incur costs from the proposed rule amendments to 
the extent that the proposed amendments encourage more foreign 
companies, which otherwise would be required to register their equity 
securities under the Exchange Act, to claim the Rule 12g3-2(b) 
exemption, where the information, enforcement remedies, and other 
effects of registration are valuable to investors. We estimate that, on 
an annual basis, approximately 150 additional foreign private issuers 
could claim the Rule 12g3-2(b) exemption as a result of the proposed 
amendments to Rule 12g3-2. Some less technologically capable investors 
may also incur costs resulting from the search and retrieval of a 
foreign company's electronically published documents.
    A foreign company would incur costs resulting from the amended 
rule's requirement to publish electronically specified non-U.S. 
disclosure documents in English to the extent that it is not already 
required to, or does not already, do so pursuant to any applicable law 
or rule. A foreign private issuer would also incur costs resulting from 
its required annual determination regarding whether it is still in 
compliance with the Rule 12g3-2(b) conditions.
    If, because of those costs, the foreign company does not claim or 
maintain the Rule 12g3-2(b) exemption, U.S. investors interested in 
trading in the securities of that company would have to resort to 
trading in the company's non-U.S. primary trading market. Those U.S. 
investors could incur costs associated with finding and contracting 
with a broker-dealer who is able to trade in the foreign reporting 
company's primary trading market. U.S. investors could also face 
additional costs resulting from currency conversion and higher 
transaction costs trading the securities in a foreign market.
Comment Solicited
    We solicit comment on the costs and benefits to U.S. and other 
investors, foreign private issuers, and others who may be affected by 
the proposed amendments to Exchange Act Rule 12g3-2 and the associated 
proposed rule amendments. We request your views on the costs and 
benefits described above as well as on any other costs and benefits 
that could result from adoption of the proposed rule amendments. We 
also request data to quantify the costs and value of the benefits 
identified. We are particularly interested in receiving

[[Page 10119]]

information concerning an issuer's expected costs of determining its 
relative U.S. trading volume under the proposed rule compared to its 
costs of having to determine the number of its U.S. holders and the 
percentage of shares held by them as required under the current rule.

V. Consideration of Impact On the Economy, Burden On Competition and 
Promotion of Efficiency, Competition and Capital Formation Analysis

A. Small Business Regulatory Enforcement Fairness Act of 1996 
Considerations

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (``SBREFA''),\137\ we solicit data to determine whether the 
rule proposals constitute a ``major'' rule. Under SBREFA, a rule is 
considered ``major'' where, if adopted, it results or is likely to 
result in:
---------------------------------------------------------------------------

    \137\ Pub. L. 104-121, Title II, 110 Stat. 857 (1996) (codified 
in various sections of 5 U.S.C., 15 U.S.C. and as a note to 5 U.S.C. 
601).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more 
(either in the form of an increase or a decrease);
     A major increase in costs or prices for consumers or 
individual industries; or
     Significant adverse effects on competition, investment or 
innovation.
    We request comment on the potential impact of the proposed rule 
amendments on these factors. Commenters are requested to provide 
empirical data and other factual support for their views if possible.

B. Securities Act Section 2(b) and Exchange Act Section 3(f) and 
Section 23(a)(2) Considerations

    When engaging in rulemaking that requires the Commission to 
consider or determine whether an action is necessary or appropriate in 
the public interest, Securities Act Section 2(b) \138\ and Exchange Act 
Section 3(f) \139\ require the Commission to consider whether the 
action will promote efficiency, competition and capital formation. 
Further, when adopting rules under the Exchange Act, Section 23(a)(2) 
of the Exchange Act \140\ requires us to consider the impact that any 
new rule would have on competition. In addition, Section 23(a)(2) 
prohibits us from adopting any rule that would impose a burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Exchange Act.
---------------------------------------------------------------------------

    \138\ 15 U.S.C. 77b(b).
    \139\ 15 U.S.C. 78c(f).
    \140\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    The rule proposals would amend the rules that determine when a 
foreign private issuer may claim the exemption from Exchange Act 
Section 12(g) registration under Exchange Act Rule 12g3-2(b). That 
exemption permits limited trading of an issuer's exempted equity 
securities in the over-the-counter market in the United States as long 
as the issuer submits its non-U.S. disclosure documents to the 
Commission, notwithstanding that the issuer exceeds the Section 12(g) 
registration thresholds. Many foreign private issuers rely on the Rule 
12g3-2(b) exemption to have established ADR facilities, which make it 
easier for U.S. investors to trade in those issuers' equity securities. 
The Rule 12g3-2(b) exemption also makes it easier for broker-dealers to 
meet their Exchange Act Rule 15c2-11 obligations to investors, and 
effect the resale of a foreign private issuer's securities to QIBs 
under Securities Act Rule 144A.
    The proposed rule amendments would permit a foreign private issuer 
to claim the Rule 12g3-2(b) exemption without having to submit a paper 
application to the Commission, as is currently required, if, among 
other conditions, the U.S. average daily trading volume of its equity 
securities was no greater than 20 percent of its worldwide average 
daily trading volume for its most recently completed fiscal year. The 
proposed rule amendments would also require an issuer to publish in 
English specified non-U.S. disclosure documents on its Internet Web 
site or through an electronic information delivery system that is 
generally available to the public in its primary trading market. 
Currently an issuer that has obtained the Rule 12g3-2(b) exemption by 
application may submit its non-U.S. disclosure documents in paper to 
the Commission.
    By enabling a qualified foreign private issuer to claim the Rule 
12g3-2(b) exemption automatically, and without regard to the number of 
its U.S. shareholders, as is currently the case, the proposed rule 
amendments should encourage more foreign private issuers to claim the 
Rule 12g3-2(b) exemption by lowering the costs of obtaining that 
exemption. Consequently, the proposed rule amendments should foster the 
trading of foreign companies' equity securities in the U.S. over-the-
counter market, for example, by enabling the establishment of 
additional ADR facilities and making it easier for broker-dealers to 
meet their Rule 15c2-11 obligations to investors with respect to 
foreign securities. The enhanced ability of investors to trade foreign 
securities in the United States should help encourage competition 
between domestic and foreign firms for investors in the U.S. over-the-
counter market.
    Moreover, by requiring the electronic publication in English of 
specified non-U.S. disclosure documents for any issuer claiming the 
Rule 12g3-2(b) exemption, the proposed amendments should make it easier 
for U.S. investors to gain access to a foreign private issuer's 
material non-U.S. disclosure documents and make better informed 
decisions regarding whether to invest in that issuer's equity 
securities. Thus, the proposed amendments should foster increased 
efficiency in the trading of the issuer's securities.
    We solicit comment on whether the proposed rules would impose a 
burden on competition or whether they would promote efficiency, 
competition and capital formation. Commenters are requested to provide 
empirical data and other factual support for their views if possible.

VI. Regulatory Flexibility Act Certification

    The Securities and Exchange Commission hereby certifies, pursuant 
to 5 U.S.C. 605(b), that the proposed amendments to Exchange Act Rules 
12g3-2 and 15c2-11, Exchange Act Forms 40-F, 6-K, 15, and 15F, and 
Securities Act Form F-6, if adopted, would not have a significant 
economic impact on a substantial number of small entities for purposes 
of the Regulatory Flexibility Act. The reason for this certification is 
as follows.
    The proposed rule amendments would permit a foreign private issuer 
to claim the exemption from registration under Exchange Act Rule 12g3-
2(b) if, among other conditions, the U.S. average daily trading volume 
of its equity securities was no greater than 20 percent of its 
worldwide average daily trading volume for its most recently completed 
fiscal year. The proposed rule amendments would also require an issuer 
to publish electronically its non-U.S. disclosure documents rather than 
submit them in paper to the Commission, as under the current rule.
    Because the proposed amendments would only apply to foreign private 
issuers, they would directly affect only foreign companies and not 
domestic companies. Based on an analysis of the language and 
legislative history of the Regulatory Flexibility Act, Congress did not 
intend that the Act apply to foreign issuers. Accordingly, the entities 
directly affected by the proposed rule and form amendments will fall 
outside the scope of the Act. For this reason, proposed amended 
Exchange Act Rule 12g3-2 and the other proposed rule and

[[Page 10120]]

form amendments should not have a significant economic impact on a 
substantial number of small entities.
    We encourage written comments regarding this certification. We 
request in particular that commenters describe the nature of any impact 
on small entities and provide empirical data to support the extent of 
the impact.

VII. Statutory Basis and Text of Proposed Amendments

    We propose to amend Securities Act Form F-6, Exchange Act Rules 
12g3-2 and 15c2-11, and Exchange Act Forms 40-F, 6-K, 15, and 15F under 
the authority in Sections 6, 7, 10 and 19 of the Securities Act \141\ 
and Sections 3(b), 12, 13, 23 and 36 of the Exchange Act.\142\
---------------------------------------------------------------------------

    \141\ 15 U.S.C. 77f, 77g, 77h, 77j, and 77s.
    \142\ 15 U.S.C. 78c, 78l, 78m, 78w, and 78mm.
---------------------------------------------------------------------------

Text of Proposed Rule Amendments

List of Subjects in 17 CFR Parts 239, 240 and 249

    Reporting and recordkeeping requirements, Securities.

    In accordance with the foregoing, we propose to amend Title 17, 
Chapter II of the Code of Federal Regulations as follows.

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

    1. The authority citation for part 239 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 
77sss, 78c, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll, 78mm, 80a-
2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 
80a-30, and 80a-37, unless otherwise noted.
* * * * *
    2. Amend Form F-6 (referenced in Sec.  239.36) by revising Item 2 
of Part I to read as follows:

    Note: The text of Form F-6 does not and this amendment will not 
appear in the Code of Federal Regulations.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Washington, DC 20549

FORM F-6

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 FOR DEPOSITARY 
SHARES EVIDENCED BY AMERICAN DEPOSITARY RECEIPTS

* * * * *

PART I--INFORMATION REQUIRED IN PROSPECTUS

* * * * *

Item 2. Available Information

    Provide the information in either (a) or (b) below, whichever is 
applicable.
    (a) State that the foreign issuer publishes information in 
English required to maintain the exemption from registration under 
Rule 12g3-2(b) of the Securities Exchange of 1934 on its Internet 
Web site or through an electronic information delivery system 
generally available to the public in its primary trading market. 
Then disclose the address of the foreign issuer's Internet Web site 
or the electronic information delivery system in its primary trading 
market.
    (b) State that the foreign issuer is subject to the periodic 
reporting requirements of the Securities Exchange Act of 1934 and 
accordingly files reports with the Commission. Then disclose that 
these reports are available for inspection and copying through the 
Commission's EDGAR system or at public reference facilities 
maintained by the Commission in Washington, DC.
* * * * *

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

    3. The authority citation for part 240 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 
78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 
80b-11, and 7201, et seq.; and 18 U.S.C. 1350, unless otherwise 
noted.
* * * * *
    4. Amend Sec.  240.12g3-2 by revising paragraphs (b), (c), (d), and 
(e), and removing paragraph (f), to read as follows:


Sec.  240.12g3-2  Exemptions for American depositary receipts and 
certain foreign securities.

* * * * *
    (b) A foreign private issuer shall be exempt from the requirement 
to register a class of equity securities under section 12(g) of the Act 
(15 U.S.C. 78l(g)) if:
    (1) The issuer is not required to file or furnish reports under 
section 13(a) of the Act (15 U.S.C. 78m(a)) or section 15(d) of the Act 
(15 U.S.C. 78o(d));
    (2) The issuer currently maintains a listing of the subject class 
of securities on one or more exchanges in a foreign jurisdiction that, 
either singly or together with the trading of the same class of the 
issuer's securities in another foreign jurisdiction, constitutes the 
primary trading market for those securities;
    (3)(i) The average daily trading volume of the subject class of 
securities in the United States for the issuer's most recently 
completed fiscal year has been no greater than 20 percent of the 
average daily trading volume of that class of securities on a worldwide 
basis for the same period; or
    (ii) The issuer has terminated its registration of a class of 
securities under section 12(g) of the Act, or terminated its obligation 
to file or furnish reports under section 15(d) of the Act, pursuant to 
Sec.  240.12h-6; and
    (4)(i) The issuer has published in English, on its Internet Web 
site or through an electronic information delivery system generally 
available to the public in its primary trading market, information 
that, since the first day of its most recently completed fiscal year, 
it:
    (A) Has made public or been required to make public pursuant to the 
laws of the country of its incorporation, organization or domicile;
    (B) Has filed or been required to file with the principal stock 
exchange in its primary trading market on which its securities are 
traded and which has been made public by that exchange; and
    (C) Has distributed or been required to distribute to its security 
holders.
    (ii) The information required to be published electronically under 
paragraph (b)(4)(i) of this section is information that is material to 
an investment decision regarding the subject securities, such as 
information concerning:
    (A) Results of operations or financial condition;
    (B) Changes in business;
    (C) Acquisitions or dispositions of assets;
    (D) The issuance, redemption or acquisition of securities;
    (E) Changes in management or control;
    (F) The granting of options or the payment of other remuneration to 
directors or officers; and
    (G) Transactions with directors, officers or principal security 
holders.
    (iii) At a minimum, a foreign private issuer shall electronically 
publish English translations of the following documents required to be 
published under paragraph (b)(4)(i) of this section if in a foreign 
language:
    (A) Its annual report, including or accompanied by annual financial 
statements;
    (B) Interim reports that include financial statements;
    (C) Press releases; and
    (D) All other communications and documents distributed directly to 
security holders of each class of securities to which the exemption 
relates.
    Note 1 to Paragraph (b): For the purpose of paragraph (b)(2) of 
this section, primary trading market means that at least 55 percent of 
the trading in the subject class of securities took place in, on or 
through the facilities of a

[[Page 10121]]

securities market or markets in a single foreign jurisdiction or in no 
more than two foreign jurisdictions during the issuer's most recently 
completed fiscal year. If a foreign private issuer aggregates the 
trading of its subject class of securities in two foreign jurisdictions 
for the purpose of this paragraph, the trading for the issuer's 
securities in at least one of the two foreign jurisdictions must be 
larger than the trading in the United States for the same class of the 
issuer's securities.
    Note 2 to Paragraph (b): For the purpose of paragraph (b)(3) of 
this section, calculate United States trading volume and worldwide 
trading volume as under Sec.  240.12h-6.
    Note 3 to Paragraph (b): Paragraph (b)(4)(i) of this section does 
not apply to an issuer when claiming the exemption under paragraph (b) 
in connection with or following the recent effectiveness of the 
termination of its registration of a class of securities under section 
12(g) of the Act, or the termination of its obligation to file or 
furnish reports under section 15(d) of the Act.
    (c)(1) In order to maintain the exemption under paragraph (b) of 
this section, a foreign private issuer shall publish, on an ongoing 
basis and for each subsequent fiscal year, in English, on its Internet 
Web site or through an electronic information delivery system generally 
available to the public in its primary trading market, the information 
specified in paragraph (b)(4) of this section.
    (2) An issuer must electronically publish the information required 
by paragraph (c)(1) of this section promptly after the information has 
been made public.
    (d) The exemption under paragraph (b) of this section shall remain 
in effect until:
    (1) The issuer no longer satisfies the electronic publication 
condition of paragraph (c) of this section;
    (2) The issuer no longer maintains a listing for the subject class 
of securities on one or more exchanges in its primary trading market;
    (3) The average daily trading volume of the subject class of 
securities in the United States exceeds 20 percent of the average daily 
trading volume of that class of securities on a worldwide basis for the 
issuer's most recently completed fiscal year, other than the year in 
which the issuer first claimed the exemption under paragraph (b) of 
this section; or
    (4) The issuer registers a class of securities under section 12 of 
the Act or incurs reporting obligations under section 15(d) of the Act.
    (e) Depositary shares registered on Form F-6 (Sec.  239.36 of this 
chapter), but not the underlying deposited securities, are exempt from 
section 12(g) of the Act under this paragraph.
    5. Amend Sec.  240.15c2-11 by revising paragraph (a)(4) to read as 
follows:


Sec.  240.15c2-11  Initiation or resumption of quotations without 
specific information.

* * * * *
    (a) * * *
    (4) The information that, since the beginning of its last fiscal 
year, the issuer has published pursuant to Sec.  240.12g3-2(b) to 
maintain the exemption from registration under section 12(g) of the 
Act, and which the broker or dealer shall make reasonably available 
upon the request of a person expressing an interest in a proposed 
transaction in the issuer's security with such broker or dealer; or
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    6. The authority citation for part 249 continues to read in part as 
follows:

    Authority: 15 U.S.C. 78a, et seq., and 7202, 7233, 7241, 7262, 
7264, and 7265; and 18 U.S.C. 1350, unless otherwise noted.
* * * * *
    7. Amend Form 40-F (referenced in Sec.  249.240f), the cover page, 
by removing the second to last paragraph, which pertains to information 
furnished pursuant to Rule 12g3-2(b), including the check boxes.

    Note: The text of Form 40-F does not and this amendment will not 
appear in the Code of Federal Regulations.

    8. Amend Form 6-K (referenced in Sec.  249.306), the cover page, by 
removing the two paragraphs, which pertain to information furnished 
pursuant to Rule 12g3-2(b), following the second Note, including the 
check boxes.

    Note: The text of Form 6-K does not and this amendment will not 
appear in the Code of Federal Regulations.

    9. Amend Form 15 (referenced in Sec.  249.323) by revising the 
check boxes on the cover page to read as follows:

    Note: The text of Form 15 does not and this amendment will not 
appear in the Code of Federal Regulations.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Washington, DC 20549

FORM 15

CERTIFICATION AND NOTICE OF TERMINATION OF REGISTRATION UNDER SECTION 
12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR SUSPENSION OF DUTY TO 
FILE REPORTS UNDER SECTIONS 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT 
OF 1934.

* * * * *
Rule 12g-4(a)(1) [msqu]
Rule 12g-4(a)(2) [msqu]
Rule 12h-3(b)(1)(i) [msqu]
Rule 12h-3(b)(1)(ii) [msqu]
Rule 15d-6 [msqu]
* * * * *
    10. Amend Form 15F (referenced in Sec.  249.324) by revising 
General Instruction E and Item 9 of Part II to read as follows:

    Note: The text of Form 15F does not and this amendment will not 
appear in the Code of Federal Regulations.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Washington, DC 20549

FORM 15F

CERTIFICATION OF A FOREIGN PRIVATE ISSUER'S TERMINATION OF REGISTRATION 
OF A CLASS OF SECURITIES UNDER SECTION 12(g) OF THE SECURITIES EXCHANGE 
ACT OF 1934 OR ITS TERMINATION OF THE DUTY TO FILE REPORTS UNDER 
SECTION 13(a) OR SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

* * * * *

GENERAL INSTRUCTIONS

* * * * *

E. Rule 12g3-2(b) Exemption

    Regardless of the particular Rule 12h-6 provision under which it 
is proceeding, a foreign private issuer that has filed a Form 15F 
regarding a class of equity securities shall receive the exemption 
under Rule 12g3-2(b) (17 CFR 240.12g3-2(b)) for the subject class of 
equity securities immediately upon the effective date of its 
termination of registration and reporting under Rule 12h-6. Refer to 
Rule 12g3-2(c) and (d) (17 CFR 240.12g3-2(c) and (d)) for the 
conditions that a foreign private issuer must meet in order to 
maintain the Rule 12g3-2(b) exemption following its termination of 
Exchange Act registration and reporting.
* * * * *

PART II

Item 9. Rule 12g3-2(b) Exemption

    Disclose the address of your Internet Web site or of the 
electronic information delivery system in your primary trading 
market on which you have published and will publish the information 
required under Rule 12g3-2(b)(4) (17 CFR 240.12g3-2(b)(4)) and Rule 
12g3-2(c) to maintain the exemption under Rule 12g3-2(b).

[[Page 10122]]

Instruction to Item 9.

    Refer to Rule 12g3-2(b)(4)(iii) (17 CFR 240.12g3-2(b)(4)(iii)) 
for instructions regarding providing English translations of 
documents required to maintain the Rule 12g3-2(b) exemption.
* * * * *

    Dated: February 19, 2008.

    By the Commission.
Nancy M. Morris,
Secretary.
 [FR Doc. E8-3424 Filed 2-22-08; 8:45 am]

BILLING CODE 8011-01-P
