58300 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

1 17 CFR 230.405. 

2 17 CFR 230.400 et seq. 3 17 CFR 239.31. 

4 17 CFR 239.33. 

5 17 CFR 239.34. 

6 15 U.S.C. 77a et seq. 7 17 CFR 249.220f. 

8 15 U.S.C. 78a et seq. 

9 17 CFR 240.3b–4. 

10 17 CFR 240.13a–10. 

11 17 CFR 240.13e–3. 

12 17 CFR 240.15d–2. 

13 17 CFR 240.15d–10. 

14Although amending Rule 13e–3 is consistent 

with other Commission initiatives that seek to 

address changes in our disclosure and other 

requirements applicable to foreign private issuers, 

the amendment also will apply to transactions 

effected by domestic issuers. 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Parts 230, 239, 240 and 249 

[Release Nos. 33–8959; 34–58620; 

International Series Release No. 1310; File 

No. S7–05–08] 

RIN 3235–AK03 

Foreign Issuer Reporting 

Enhancements 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Final rule. 

SUMMARY: We are adopting a number of 

amendments to our rules relating to 

foreign private issuers that are intended 

to enhance the information that is 

available to investors. These 

amendments are part of a series of 

initiatives that seek to effect changes in 

our disclosure and other requirements 

applicable to foreign private issuers in 

light of market developments, new 

technologies and other matters in a 

manner that promotes investor 

protection and cross-border capital 

flows. We are adopting amendments 

that would enable foreign issuers to test 

their eligibility to use the special forms 

and rules available to foreign private 

issuers once a year, rather than 

continuously. We also are adopting 

amendments to change the deadline for 

annual reports filed by foreign private 

issuers and to eliminate an option under 

which foreign private issuers are 

permitted to omit segment data from 

their U.S. GAAP financial statements, 

and an amendment to the rule 

pertaining to going private transactions 

to reflect the new termination of 

reporting and deregistration rules for 

foreign private issuers. In addition, we 

are adopting amendments that would 

revise the annual report and registration 

statement forms used by foreign private 

issuers to improve certain disclosures 

provided in these forms. 

DATES: Effective Date: December 5, 2008. 

Compliance Dates: The compliance 

dates are as follows: 

• A foreign private issuer must begin 

to comply with the requirements to 

provide information pursuant to Item 

16G of Form 20–F, which pertains to 

corporate governance disclosures, for its 

first fiscal year ending on or after 

December 15, 2008. 

• A foreign private issuer must begin 

to comply with the amendment to 

eliminate Instruction 3 to Item 17 of 

Form 20–F, which permits the omission 

of segment data in certain 

circumstances; to provide disclosure 

pursuant to Item 16F of Form 20–F, 

which pertains to a change in 

registrant’s certifying accountant; and to 

provide disclosure about American 

Depositary Receipts fees and payments 

for its first fiscal year ending on or after 

December 15, 2009. 

• A foreign private issuer must begin 

to comply with the requirement to file 

its Form 20–F annual report on an 

accelerated basis for its first fiscal year 

ending on or after December 15, 2011. 

A foreign private issuer must begin to 

comply with the requirements to file 

transition reports pursuant to the 

amendments to Rules 13a–10(g)(3) and 

15d–10(g)(3), and special financial 

reports pursuant to the amendments to 

Rule 15d–2(a) for its first fiscal year 

ending on or after December 15, 2011. 

In addition, a foreign private issuer 

must begin to comply with the 

requirement to prepare financial 

statements according to Item 18 of Form 

20–F in the annual report filed for its 

first fiscal year ending on or after 

December 15, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Felicia H. Kung, Senior Special Counsel, 

Office of International Corporate 

Finance, Division of Corporation 

Finance, at (202) 551–3450, or Craig 

Olinger, Deputy Chief Accountant, 

Division of Corporation Finance, at 

(202) 551–3400, or Jeffrey J. Minton, 

Chief Counsel, Office of the Chief 

Accountant, at (202) 551–5300, U.S. 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–3628. 

SUPPLEMENTARY INFORMATION: We are 

adopting amendments to Rule 405 1 of 

Regulation C,2 Form F–1,3 Form F–3 4

and Form F–4 5 under the Securities Act 

of 1933 (‘‘Securities Act’’),6 Form 20–F 7

under the Securities Exchange Act of 

1934 (‘‘Exchange Act’’),8 and Exchange 

Act Rules 3b–4,9 13a–10,10 13e–3,11

15d–2,12 and 15d–10.13 The 

amendments will: (1) Permit foreign 

issuers to test their qualification to use 

the forms and rules available to foreign 

private issuers on an annual basis, 

rather than on the continuous basis that 

is currently required; (2) Accelerate the 

filing deadline for annual reports filed 

on Form 20–F by foreign private issuers 

under the Exchange Act by shortening 

the filing deadline from six months to 

four months after the foreign private 

issuer’s fiscal year-end, after a threeyear transition period; (3) Eliminate an 

instruction to Item 17 of Form 20–F that 

permits certain foreign private issuers to 

omit segment data from their U.S. GAAP 

financial statements; (4) Amend Rule 

13e–3 under the Exchange Act by 

reflecting the new termination of 

reporting and deregistration rules for 

foreign private issuers; 14 (5) Require 

foreign private issuers that are required 

to provide a U.S. GAAP reconciliation 

to do so pursuant to Item 18 of Form 

20–F; and (6) Amend Form 20–F to 

require foreign private issuers to 

disclose information about changes in 

the issuer’s certifying accountant, the 

fees and charges paid by holders of 

American Depositary Receipts 

(‘‘ADRs’’), the payments made by the 

depositary to the foreign issuer whose 

securities underlie the ADRs, and, for 

listed issuers, the differences in the 

foreign private issuer’s corporate 

governance practices and those 

applicable to domestic companies under 

the relevant exchange’s listing rules. 

Table of Contents 

I. Summary 

A. Proposed Amendments 

B. Principal Comments Received 

C. Summary of Adopted Amendments 

II. Discussion of the Amendments 

A. Annual Test for Foreign Private Issuer 

Status 

B. Accelerating the Reporting Deadline for 

Form 20–F Annual Reports 

C. Segment Data Disclosure 

D. Exchange Act Rule 13e–3 

E. Requiring Item 18 Reconciliation in 

Annual Reports and Registration 

Statements 

F. Disclosure About Changes in a 

Registrant’s Certifying Accountant 

G. Annual Disclosure About ADR Fees and 

Payments 

H. Disclosure About Differences in 

Corporate Governance Practices 

III. Other Matters Considered 

IV. Paperwork Reduction Act 

V. Cost-Benefit Analysis 

VI. Consideration of Impact on the Economy, 

Burden on Competition, and Promotion 

of Efficiency, Competition, and Capital 

Formation 

VII. Regulatory Flexibility Act Certification 

VIII. Statutory Authority and Text of Final 

Amendments 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58301 

15Release No. 33–8900 (Feb. 29, 2008) [73 FR 

13404] (hereinafter ‘‘Proposing Release’’). 

16 ‘‘Foreign private issuer’’ is defined in Exchange 

Act Rule 3b–4(c). A foreign private issuer is any 

foreign issuer other than a foreign government, 

except for an issuer that (1) has more than 50% of 

its outstanding voting securities held of record by 

U.S. residents and (2) any of the following: (i) A 

majority of its officers and directors are citizens or 

residents of the United States, (ii) more than 50 

percent of its assets are located in the United States, 

or (iii) its business is principally administered in 

the United States. 

17Form 20–F is the combined registration 

statement and annual report form for foreign private 

issuers under the Exchange Act. It also sets forth 

disclosure requirements for registration statements 

filed by foreign private issuers under the Securities 

Act. 

18See Release No. 34–16371 (Nov. 29, 1979) [44 

FR 70132] (hereinafter ‘‘Form 20–F Adopting 

Release’’). 

19See id. 

20See id. 

21Release No. 33–8879 (Dec. 21, 2007) [73 FR 

986]. 

22 IOSCO consists of securities regulators from 

109 countries (‘‘ordinary’’ members) who are 

committed to working together ‘‘to promote high 

standards of regulation to maintain just, efficient 

and sound markets.’’ IOSCO, General Information 

About IOSCO, at http://www.iosco.org/about/. 

23Available at http://www.iosco.org/library/ 

pubdocs/pdf/IOSCOPD81.pdf. The IOSCO 

Technical Committee recently published the 

International Disclosure Principles for Cross-Border 

Offerings and Listings of Debt Securities by Foreign 

Issuers (2007), available at http://www.iosco.org/ 

library/pubdocs/pdf/IOSCOPD242.pdf. These 

IOSCO Principles apply to prospectuses used by 

foreign issuers for offerings and listings of debt 

securities. The Commission’s prospectus disclosure 

requirements for debt securities offered by foreign 

private issuers, which are contained in Form 20– 

F, are also consistent with these IOSCO Principles. 

24Release No. 33–7745 (Sept. 28, 1999) [64 FR 

53900]. 

25 15 U.S.C. 7201 et seq. 

26We permitted foreign private issuers to comply 

with the requirement to include in their annual 

reports management’s report on the company’s 

internal control over financial reporting and the 

auditor’s attestation on a delayed basis compared to 

some domestic issuers. See Release No. 33–8392 

(Feb. 24, 2004) [69 FR 9722] (extending the original 

compliance dates for accelerated filers to fiscal 

years ending on or after November 15, 2004, and 

for companies that are not accelerated filers and for 

foreign private issuers, to fiscal years ending on or 

after July 15, 2005); Release No. 33–8545 (Mar. 2, 

2005) [70 FR 11528] (adopting an additional oneyear extension of the compliance dates for 

companies that are non-accelerated filers and for 

foreign private issuers filing annual reports on 

Forms 20–F or 40–F); Release No. 33–8730A (Aug. 

9, 2006) [71 FR 47056] (extending for one year the 

date by which a foreign private issuer that is an 

accelerated filer and that files annual reports on 

Forms 20–F or 40–F must begin to comply with the 

requirement to provide the auditor’s attestation 

report on internal control over financial reporting). 

Foreign private issuers also are permitted to report 

changes in their internal controls over financial 

reporting on an annual basis, rather than on a 

quarterly basis as is required of domestic issuers. 

Release No. 33–8238 (June 5, 2003) [68 FR 36636]. 

27See Release No. 33–8220 (Apr. 9, 2003) [68 FR 

18788]. 

28Release No. 34–55540 (Mar. 27, 2007) [72 FR 

16934]. 

29 Id. 

30Release No. 34–58465 (Sept. 5, 2008). 

31 17 CFR 240.12g3–2(b). 

32 15 U.S.C. 78l(g). 

33See Release No. 34–58597 (Sept. 19, 2008). 

34See Proposing Release, supra note 15. 

I. Summary 

A. Proposed Amendments 

In February 2008, we published for 

comment proposed amendments to 

rules and forms aimed at enhancing the 

disclosures that foreign private issuers 

provide to investors in the U.S. public 

markets, and improving the accessibility 

of our public markets to these issuers.15

The proposed amendments reflect 

changes in the nature of the global 

capital markets, as well as advances in 

technology with respect to the gathering 

and processing of information, that have 

occurred since the Commission’s 

adoption of Form 20–F almost 30 years 

ago. When the Commission adopted 

Form 20–F, the form used by foreign 

private issuers 16 to register a class of 

securities under the Exchange Act and 

to file annual reports,17 our objective 

was to elicit disclosures from foreign 

private issuers that were as equal as 

practicable to that provided by domestic 

issuers.18 Because of differences in the 

national laws and accounting 

regulations applicable to foreign private 

issuers, we provided specified 

disclosure accommodations in Form 20– 

F.19 However, we indicated that our 

assessment of the appropriate disclosure 

requirements for foreign private issuers 

was part of an ongoing evolutionary 

process.20

As noted previously in the Proposing 

Release, there has been a movement 

toward greater international agreement 

on the accounting and other nonfinancial statement disclosures that 

should be provided by issuers. The 

Commission has undertaken a number 

of initiatives that recognize this. For 

example, we adopted rules last 

December to permit foreign private 

issuers to file financial statements with 

the Commission that are prepared in 

accordance with International Financial 

Reporting Standards (‘‘IFRS’’), as issued 

by the International Accounting 

Standards Board (‘‘IASB’’), without 

reconciliation to generally accepted 

accounting principles (‘‘GAAP’’) used in 

the United States.21 Those rules are part 

of our efforts to foster a single set of 

globally accepted accounting standards. 

We also incorporated into Form 20–F all 

of the International Organization of 

Securities Commission’s 

(‘‘IOSCO’’) 22 International Disclosure 

Standards for Cross-Border Offerings 

and Initial Listings by Foreign Issuers,23

which pertain to prospectuses prepared 

by foreign issuers for public offerings 

and listing of equity securities.24

In addition, the Commission has 

sought to facilitate cross-border capital 

flows. When implementing certain 

provisions of the Sarbanes-Oxley Act of 

2002 (‘‘Sarbanes-Oxley Act’’),25 we also 

provided several significant 

accommodations to foreign private 

issuers relating to the requirements on 

internal control over financial 

reporting 26 and audit committee 

independence.27 These 

accommodations recognized non-U.S. 

practices and requirements. In March 

2007, we also adopted rules that made 

it easier for foreign private issuers to 

terminate their reporting obligations and 

deregister their securities.28 We adopted 

these rules to address concerns that the 

burdens and uncertainties associated 

with terminating their registration and 

reporting obligations under the 

Exchange Act could serve as a 

disincentive to foreign private issuers 

accessing the U.S. public capital 

markets.29 In a related release,30 we are 

adopting amendments to Exchange Act 

Rule 12g3–2(b) 31 to expand the 

availability of this exemption from 

registration under Section 12(g) 32 of the 

Exchange Act for foreign private issuers, 

so that a qualified foreign private issuer 

that meets specified conditions can 

claim the exemption automatically 

without regard to the number of its U.S. 

shareholders. In another related release, 

we are adopting amendments that 

expand and enhance the utility of the 

cross-border exemptions for business 

combination transactions.33 These 

amendments are expected to encourage 

offerors and issuers in cross-border 

business combinations, and rights 

offerings by foreign private issuers to 

permit U.S. security holders to 

participate in these transactions in the 

same manner as other holders. 

As part of our continuous assessment 

of our rules pertaining to foreign private 

issuers, we proposed amendments to 

rules and forms last February that 

reflected our view that some of the 

disclosure accommodations that we 

provided to foreign private issuers 

almost 30 years ago may no longer be 

appropriate or necessary in light of 

global market developments and 

advancements in technology.34 These 

proposed rule and form amendments 

sought to balance our dual objectives of 

enhancing the reporting of information 

by foreign private issuers, including the 

timeframe within which investors can 

have access to that information, and 

improving the accessibility of our public 

markets to these issuers. Among other 

things, we proposed amendments that 

would permit reporting foreign issuers 

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58302 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

35These comment letters are available on the 

Commission’s Internet Web site, located at http:// 

www.sec.gov/comments/s7-05-08/s70508.shtml, and 

in the Commission’s Public Reference Room in its 

Washington, DC headquarters. 

to assess their eligibility to use the 

special forms and rules available to 

foreign private issuers once a year, 

rather than on a continuous basis. We 

also proposed amendments to change 

the deadline for annual reports filed by 

foreign private issuers and to eliminate 

an option under which foreign private 

issuers may omit segment data from 

their U.S. GAAP financial statements, 

and an amendment to the rule 

pertaining to going private transactions 

to reflect the new termination of 

reporting and deregistration rules for 

foreign private issuers. In addition, we 

proposed amendments that would 

revise Form 20–F to improve certain 

disclosures provided in that form. 

B. Principal Comments Received 

We received 52 comment letters in 

response to our proposed rule and form 

amendments from a variety of market 

participants.35 The respondents 

included businesses, financial and legal 

associations, law firms, accounting 

firms, depositary banks, financial 

services providers, and one securities 

exchange. The comments received on 

most of the proposed amendments were 

supportive, although commenters 

provided useful suggestions on several 

of the proposals. Almost all of the 

comments received on the proposal to 

permit foreign issuers to test their status 

as foreign private issuers once a year, 

rather than continuously, were very 

positive. Commenters noted that this 

proposal would reduce compliance 

burdens on foreign private issuers, as 

well as align the testing and transition 

requirements for foreign private issuer 

status with the requirements applicable 

to determining accelerated filer and 

small reporting company status. 

We also received mainly positive 

comments about the proposed 

amendments to require foreign private 

issuers to disclose in their Form 20–F 

annual reports changes in and 

disagreements with their certifying 

accountant, and significant differences 

in the corporate governance practices of 

listed foreign private issuers compared 

to the corporate governance practices 

applicable to domestic companies under 

the relevant exchange’s listing 

standards. While several commenters 

believed the proposed disclosure would 

be more useful if it was made on a more 

timely basis, commenters generally 

noted that the proposal regarding 

disclosure of a change in a registrant’s 

certifying accountant would provide 

investors with useful information, and 

would be consistent with the disclosure 

currently required of domestic issuers. 

With respect to the corporate 

governance proposal, commenters noted 

the usefulness of having all of a foreign 

private issuer’s corporate governance 

information in one location. 

In addition, we received primarily 

positive feedback on our proposed 

amendments to eliminate the option 

permitting foreign private issuers to 

omit segment data from their U.S. GAAP 

financial statements, to reference the 

new termination of reporting and 

deregistration rules applicable to foreign 

private issuers in Exchange Act Rule 

13e–3, and to require annual disclosure 

in Form 20–F about ADR fees and 

payments. These proposals were 

supported as providing useful 

information to investors, and in the case 

of Rule 13e–3, providing regulatory 

consistency with the new deregistration 

and termination of reporting provisions. 

We received a wide range of 

comments on some of the other 

proposed amendments. In particular, 

many commenters opposed the proposal 

to accelerate the reporting deadline for 

Form 20–F annual reports. We had 

proposed amendments to accelerate the 

filing deadline for Form 20–F annual 

reports by shortening the filing deadline 

from 6 months to within 90 days after 

the foreign private issuer’s fiscal yearend in the case of large accelerated and 

accelerated filers, and to within 120 

days after a foreign private issuer’s fiscal 

year-end for all other issuers, after a 

two-year transition period. Commenters 

expressed concern that many foreign 

private issuers must prepare financial 

statements according to local GAAP 

under their home country’s laws and 

regulations, and would need additional 

time to prepare their financial 

statements in accordance with U.S. 

GAAP or IFRS as issued by the IASB, or 

to reconcile their financial statements to 

U.S. GAAP for the Form 20–F. 

Commenters also noted that many 

foreign private issuers need additional 

time to translate information into 

English for Form 20–F, and to provide 

the additional non-financial statement 

disclosures that are required in Form 

20–F compared to their home country 

annual reports. Other commenters noted 

that the proposed acceleration deadlines 

could well result in filing dates that 

override annual report filing deadlines 

in some issuers’ home countries, and 

that, in any case, foreign private issuers 

provide their home country annual 

reports to U.S. investors through the 

submission of those reports on Form 

6–K. 

We also received a wide range of 

responses to our proposed amendments 

to require foreign private issuers that are 

required to provide a U.S. GAAP 

reconciliation to do so pursuant to Item 

18 of Form 20–F. Although some 

commenters noted that the proposal to 

require Item 18 information would 

provide investors with more complete 

financial information, others expressed 

concern about the necessity of the 

proposed amendments, since many 

countries are gradually requiring 

footnote disclosures comparable to U.S. 

GAAP and Regulation S–X. 

C. Summary of Adopted Amendments 

We have carefully considered the 

comments received regarding the 

proposed amendments and have 

concluded that it is appropriate to adopt 

the amendments, substantially as 

proposed in the case of most of the 

amendments. Some of the amendments 

have been modified to reflect 

suggestions offered by commenters in 

response to questions posed in the 

Proposing Release. 

The adopted amendments will: 

• Permit reporting foreign issuers to 

assess their eligibility to use the special 

forms and rules available to foreign 

private issuers once a year on the last 

business day of their second fiscal 

quarter, rather than on a continuous 

basis, which is currently required; 

• Accelerate the reporting deadline 

for annual reports filed on Form 20–F 

by foreign private issuers from six 

months to four months after the issuer’s 

fiscal year-end, after a three-year 

transition period; 

• Amend Form 20–F by eliminating 

an instruction to Item 17 of that Form 

that permits certain foreign private 

issuers to omit segment data from their 

U.S. GAAP financial statements; 

• Amend Exchange Act Rule 13e–3, 

which pertains to going private 

transactions by reporting issuers or their 

affiliates, to reflect the recently adopted 

deregistration and termination of 

reporting rules applicable to foreign 

private issuers; 

• Eliminate the availability of the 

limited U.S. GAAP reconciliation option 

that is contained in Item 17 of Form 20– 

F for foreign private issuers that are only 

listing a class of securities on a U.S. 

national securities exchange, or only 

registering a class of equity securities 

under Section 12(g) of the Exchange 

Act, and not conducting a public 

offering. We also are eliminating this 

limited reconciliation option for annual 

reports filed on Form 20–F, and for 

certain non-capital raising offerings, 

such as offerings pursuant to 

reinvestment plans, offerings upon the 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58303 

36See supra note 16 for the definition of ‘‘foreign 

private issuer.’’ 

37For example, Exchange Act Rule 3a12–3(b) [17 

CFR 240.3a12–3(b)] exempts foreign private issuers 

from the Commission’s proxy rules [17 CFR 

240.14a–1 et seq.], and from the insider stock 

trading reports and short-swing profit recovery 

provisions under Section 16 [15 U.S.C. 78p] of the 

Exchange Act. Foreign private issuers also provide 

any interim reports on the basis of home country 

regulatory and stock exchange practices, rather than 

the quarterly reports that are required of U.S. 

issuers, and executive compensation disclosure on 

an aggregate basis if the information is reported on 

such a basis in the issuer’s home country. See Item 

6.B. of Form 20–F. 

38See note 16 above for a description of the 

factors that foreign issuers must monitor. The 

Commission’s staff has taken the position that, for 

the purpose of the exemptions contained in 

Exchange Act Rule 3a12–3(b), foreign private 

issuers need to assess their status at the end of each 

fiscal quarter. In addition, they must assess their 

status at the completion of any purchase or sale by 

the issuer of its equity securities (other than in 

connection with an employee benefit plan or 

compensation arrangement, conversion of 

outstanding convertible securities, or exercise of 

outstanding options, warrants or rights), any 

purchase or sale of assets by the issuer other than 

in the ordinary course of business, and any 

purchase of equity securities of the issuer in a 

public tender offer or exchange offer by a nonaffiliate. Foreign Private Issuers Relying on Rule 

3a12–3(b) under the Exchange Act, SEC No-Action 

Letter, [1993 Transfer Binder] Fed. Sec. L. Rep. 

(CCH) ¶ 76,667 (Mar. 30, 1993). This letter will be 

superseded by the amendments. 

39For example, if a foreign issuer concludes that 

it does not qualify as a foreign private issuer in the 

middle of its fiscal year, it may find it difficult to 

change its basis of accounting to U.S. GAAP in 

order to comply on a timely basis with the reporting 

requirements applicable to domestic issuers under 

the Exchange Act. These issuers also face the 

challenge of modifying their information and 

processing systems to comply with the domestic 

reporting and registration regime, as well as the 

executive compensation disclosure requirements, 

proxy rules and Section 16 reporting requirements 

that are applicable to domestic issuers. 

40 17 CFR 240.12b–2. 

41 17 CFR 229.10(f)(2)(i). 

42 17 CFR 229.10 et seq. See also Release No. 33– 

8876 (Dec. 19, 2007) [73 FR 934] (adopting 

amendments to the disclosure and reporting 

requirements under the Securities Act and the 

Exchange Act to expand the number of companies 

that qualify for the scaled disclosure requirements 

for smaller reporting companies). 

43See comment letter by Organization for 

International Investment. 

conversion of securities, or offerings of 

investment grade securities. Thus, all 

foreign private issuers that are required 

to provide a U.S. GAAP reconciliation 

must do so pursuant to Item 18 of Form 

20–F, although required third party 

financial statements could continue to 

be prepared pursuant to Item 17 of Form 

20–F; 

• Amend Form 20–F to require 

disclosure in annual reports filed on 

that Form about any changes in the 

registrant’s certifying accountant; 

• Amend Form 20–F to require 

annual disclosure of the fees and other 

charges paid by holders of ADRs to 

depositaries, as well as any payments 

made by depositaries to the foreign 

private issuers whose securities 

underlie the ADRs; and 

• Amend Form 20–F to require 

annual disclosure of the significant 

differences in the corporate governance 

practices of listed foreign private issuers 

compared to the corporate governance 

practices applicable to domestic 

companies under the relevant 

exchange’s listing standards. 

II. Discussion of the Amendments 

A. Annual Test for Foreign Private 

Issuer Status 

The Commission’s longstanding 

policy of facilitating the access of 

foreign issuers to the U.S. capital 

markets is evidenced by the various 

accommodations to foreign practices 

and policies it has provided to foreign 

issuers that qualify as ‘‘foreign private 

issuers.’’ 36 For many companies, the 

determination of whether they qualify 

as a foreign private issuer is important 

because of these accommodations and 

exemptions.37 However, to make sure 

that it qualifies for these 

accommodations, a foreign private 

issuer that has close to 50% of its 

outstanding voting securities held of 

record by U.S. residents may find that 

it must monitor on a continuous basis 

the different factors used to assess 

foreign private issuer status.38 This can 

result in uncertainty for these issuers as 

to which reporting and regulatory 

requirements will apply to them within 

a given period of time, as well as 

increase their compliance burdens.39

This also can result in confusion for 

investors if the issuer needs to switch 

between foreign and domestic reporting 

forms within the same fiscal year. 

We proposed amendments to permit 

foreign private issuers to assess their 

status once a year on the last business 

day of their second fiscal quarter as a 

means of providing greater certainty to 

both issuers and investors as to the 

status of these foreign issuers within a 

given period of time. This is the same 

date used to determine accelerated filer 

status under Exchange Act Rule 12b–2 40

and smaller reporting company status in 

Item 10(f)(2)(i) 41 of Regulation S–K.42

The vast majority of comments 

received on the proposed amendments 

were highly supportive. Commenters 

noted that the proposed amendments 

would benefit investors by eliminating 

confusion in the markets as to an 

issuer’s status if an issuer needs to move 

between foreign and domestic reporting 

forms in the same fiscal year. 

Commenters also noted that the 

proposed amendments would also 

eliminate uncertainty for issuers, and 

possibly reduce accounting, audit and 

information technology fees that would 

otherwise result if an issuer changed its 

status mid-year. They noted that 

substantial incremental effort is often 

required to comply with the 

Commission’s domestic issuer 

requirements. Commenters also pointed 

out that the proposed amendments 

would simplify compliance with the 

Commission’s regulations because this 

approach would be more consistent 

with our approach to determining 

accelerated filer and smaller reporting 

company status. One commenter 

suggested that the proposal would 

increase certainty and predictability for 

foreign companies with respect to their 

reporting obligations, which should in 

turn enhance the attractiveness of the 

U.S. capital markets by removing a 

disincentive to register with the 

Commission.43

After considering the comments 

received, we are adopting the 

amendments as proposed. In addition, 

we are adopting the proposed 

amendments that would require a 

foreign private issuer that determines 

that it no longer qualifies as a foreign 

private issuer on the last business day 

of its second fiscal quarter to comply 

with the reporting requirements and use 

the forms prescribed for domestic 

companies beginning on the first day of 

the fiscal year following the 

determination date. We proposed this 

amendment to give these issuers six 

months’ advance notice that they will 

need to transition to the domestic forms 

and applicable reporting requirements. 

All of the comments that we received on 

this aspect of the proposal were highly 

supportive. Under the amendments as 

adopted, a foreign issuer that does not 

qualify as a foreign private issuer as of 

the end of its second fiscal quarter in 

2009 would file a Form 10–K in 2010 for 

its 2009 fiscal year. The issuer would 

also begin complying with the proxy 

rules and Section 16, and become 

subject to reporting on Forms 8–K and 

10–Q on the first day of its 2010 fiscal 

year. 

We also are adopting amendments to 

permit a reporting company that 

qualifies as a foreign private issuer to 

avail itself of the foreign private issuer 

accommodations, including use of the 

foreign private issuer forms and 

reporting requirements, beginning on 

the determination date on which it 

establishes its eligibility as a foreign 

private issuer. Although the majority of 

comments received on this aspect of the 

proposal were positive, one 

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44See comment letter from CFA Institute Centre 

for Financial Market Integrity (‘‘CFA Institute’’). 

45Foreign private issuers submit current reports 

to the Commission on Form 6–K [17 CFR 249.306]. 

Unlike Form 8–K [17 CFR 249.308], which is the 

current report form used by domestic issuers, there 

are no specific substantive disclosures that are 

required by Form 6–K. Instead, foreign private 

issuers furnish under cover of Form 6–K whatever 

information that they (i) make or are required to 

make public pursuant to the law of the jurisdiction 

of their domicile or in which they are incorporated 

or organized, or (ii) file or are required to file with 

a stock exchange on which their securities are 

traded and which was made public by that 

exchange, or (iii) distribute or are required to 

distribute to their security holders. These reports 

are required to be furnished promptly after the 

material contained in the report is made public. 

46 17 CFR 229.10(f)(2)(i). 

47 17 CFR 239.37 to 17 CFR 239.41 and 17 CFR 

249.240f. 

48 17 CFR 249.240f. MJDS filers file annual 

reports on Form 40–F and current reports on Form 

6–K. 

49See Release No. 33–6902 (June 21, 1991) [56 FR 

30036] (adopting the MJDS system). 

50See id. 

51Form F–3 permits a foreign private issuer to 

incorporate by reference its latest Form 40–F. See 

Item 6(a) of Form F–3. 

52Under the MJDS, eligible Canadian issuers may 

satisfy certain securities registration and reporting 

requirements of the Commission by providing 

disclosure documents prepared in accordance with 

the requirements of the Canadian securities 

regulatory authorities. The MJDS also allows certain 

cash tender and exchange offers for securities of 

Canadian issuers to proceed in accordance with 

Canadian and provincial or territorial tender offer 

requirements, instead of in accordance with the 

Commission’s tender offer requirements. For more 

specific information about the accommodations 

provided to MJDS issuers, see Release No. 33–6902, 

supra note 49. 

commenter 44 contended that the 

disclosure provided in domestic forms 

was important enough to require the 

issuer to file on such forms for the 

balance of the fiscal year. Nonetheless, 

we are adopting this distinction because 

we believe the new foreign private 

issuer, who would be eligible to file its 

annual report for that fiscal year on 

Form 20–F, need not continue to 

provide reports on Form 8–K and 10–Q 

for the remainder of that fiscal year. An 

issuer that qualifies as a foreign private 

issuer should be allowed to enter the 

foreign reporting system immediately 

and furnish reports on Form 6–K,45

especially because it will be subject to 

the reporting requirements of its home 

regulator. Any reports that it files with 

its home regulator will be available to 

the Commission and the public through 

its Form 6–K submission. We note that 

the approach that we are taking here is 

consistent with our approach to smaller 

reporting companies.46

A few commenters supported 

requiring a foreign issuer to notify the 

market, either in the form of a press 

release and/or via notification on the 

issuer’s Web site, when it has 

determined that it has switched its 

status from domestic issuer to foreign 

private issuer, or vice versa. Currently, 

however, foreign private issuers do not 

provide a notice when they switch from 

domestic issuer to foreign private issuer 

status. Moreover, such a notice 

requirement would be an anomaly in 

our regulations. In similar contexts, 

such as with respect to accelerated filers 

or smaller reporting companies, we do 

not require issuers to notify the market 

when they have switched status. 

Therefore, we are not adopting a notice 

requirement, although we note that by 

furnishing a current report on Form 6– 

K rather than Form 8–K after it changes 

status, a foreign issuer in essence will be 

providing notice that it has switched 

status. Of course, issuers may 

voluntarily provide explicit notice to 

the market when they switch from 

domestic to foreign private issuer status 

in order to provide enhanced 

transparency to investors. We note that 

issuers that lose their foreign private 

issuer status would be required to file 

quarterly reports on Form 10–Q or 

current reports on Form 8–K 

immediately, thereby effectively 

providing prompt notice of their new 

status because of the change in the 

forms used. 

In addition to the amendments noted 

above, we are adopting amendments 

requiring a Canadian issuer that files 

registration statements and Exchange 

Act reports using the multijurisdictional 

disclosure system (‘‘MJDS’’) 47 to test its 

status as a foreign private issuer only as 

of the last business day of its second 

fiscal quarter. Currently, a Canadian 

issuer that is eligible to file a Form 40– 

F 48 annual report at the end of a fiscal 

year is presumed to be eligible to use 

Form 40–F, as well as Form 6–K, from 

the date of filing until the end of its next 

fiscal year.49 The amendments would 

require a Canadian issuer that plans to 

use the MJDS to test its foreign private 

issuer status earlier in the year. 

However, it would continue to have to 

test its eligibility to file annual reports 

on Form 40–F based on all of the other 

requirements of that Form, such as 

public float, at the end of the fiscal 

year.50 The amendments would not 

change the responsibility of the 

Canadian issuer to check its eligibility 

to use Forms 40–F and 6–K at the end 

of its fiscal year. 

With respect to MJDS filings made 

pursuant to the Securities Act, a 

Canadian issuer must test its ability to 

use the MJDS registration statement 

forms at the time of filing. As a result 

of the amendments, a Canadian MJDS 

filer that does not qualify as a foreign 

private issuer on the last day of its 

second fiscal quarter would 

immediately not be able use the MJDS 

forms for Securities Act offerings. 

However, the issuer would still be able 

to use the other foreign private issuer 

registration statement forms, such as 

Form F–3, until the end of its fiscal 

year.51

Although we received many 

comments generally supporting this 

approach to MJDS filers, several 

commenters had additional 

recommendations. A few commenters 

suggested that a registrant that did not 

qualify for MJDS status on the testing 

date should be permitted to use the 

MJDS registration statement forms until 

the end of its fiscal year. Some 

commenters also suggested that MJDS 

filers be permitted to test their MJDS 

status on the last business day of their 

second fiscal quarter, rather than at the 

end of the year. Other commenters 

argued that the foreign private issuer 

eligibility test should be conducted at 

the end of the year in conjunction with 

the test for MJDS eligibility, or 

alternatively, that MJDS filers should be 

required to test their foreign private 

issuer eligibility status twice a year. 

After carefully considering all of these 

comments, we have decided to adopt 

the MJDS-related amendments as 

proposed because we believe this 

approach takes into account the 

substantial accommodations that have 

been provided to MJDS filers, including 

significant disclosure 

accommodations.52 As a result of the 

amendments, the new foreign private 

issuer testing date will provide MJDS 

filers with advance notice that they may 

need to switch to the domestic issuer 

forms after the end of the fiscal year. 

Even if an MJDS filer determines that it 

no longer qualifies as a foreign private 

issuer as of the test date, it will be 

permitted to use the Securities Act 

registration statement forms, although 

not the MJDS forms, available to foreign 

private issuers for the remainder of that 

fiscal year. The new date for testing 

foreign private issuer status will provide 

a substantial accommodation for MJDS 

filers because, currently, these filers are 

required to use the domestic forms as 

soon as they lose their foreign private 

issuer status. 

B. Accelerating the Reporting Deadline 

for Form 20–F Annual Reports 

We proposed amendments to the 

filing due date for Form 20–F to reflect 

technological and other developments 

that have occurred in the nearly 30 

years that have elapsed since Form 20– 

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53Form 20–F Adopting Release, supra note 18 

(noting that the Commission decided not to adopt 

a filing due date for Form 20–F annual reports of 

four months after the registrant’s fiscal year-end in 

deference to commenters’ concerns about the need 

for more time to comply with applicable foreign 

regulations, which at that time often permitted 

annual reports to be furnished to shareholders more 

than four months after the issuer’s fiscal year-end). 

54For example, the European Union’s (‘‘EU’’) 

Transparency Directive requires companies listed 

on an EU regulated market to file their annual 

financial reports four months after the end of each 

financial year at the latest. Directive 2004/109/EC 

of the European Parliament and of the Council (Dec. 

15, 2004). All EU member states were required to 

implement the Transparency Directive by January 

20, 2007. Canadian issuers are also required to file 

their annual financial statements within a similar 

timeframe. Under National Instrument 51–102 

Continuous Disclosure Obligations, a reporting 

Canadian issuer must file its annual financial 

statements within 90 to 120 days after its most 

recently completed financial year-end, depending 

on its status as a ‘‘venture issuer’’. Israeli companies 

are required to file their annual reports within three 

months of the end of their reporting year, provided 

that the report is submitted 14 days or more before 

the date fixed for convening the general meeting at 

which the company’s financial statements will be 

presented, or within three days of the date when the 

company’s accountant signed his audit opinion, 

whichever is earlier. Regulation 7, Israeli Securities 

Regulations (Periodic and Immediate Reports). 

55See comment letter from CFA Institute. 

56See comment letter from Ernst & Young 

(‘‘E&Y’’). 

57See comment letter from Vodafone. 

58 17 CFR 210.3–09. 59See, e.g., comment letters from American Bar 

Association (‘‘ABA’’) and Linklaters LLP 

(‘‘Linklaters’’). 60See, e.g., comment letter from Linklaters. 61See comment letters from Mitsubishi UFJ 

Financial Group, Inc. (‘‘Mitsubishi’’) and Mizuho. 62See comment letter from Institute of 

International Bankers, Mitsubishi, and Paul, Weiss, 

Rifkind, Wharton & Garrison LLP (‘‘Paul Weiss’’). 63See, e.g., comment letters from Cleary Gottlieb 

Steen & Hamilton (‘‘Cleary Gottlieb’’), Mitsubishi, 

Mizuho, and Sociedad Quimica y Minera de Chile 

S.A. 

64These requirements, which are generally not 

required in home country reporting, include the 

Section 302 and 906 officer certifications and the 

review of internal controls over financial reporting. 

F was first adopted. Our proposed 

amendments would have accelerated 

the reporting due date for annual reports 

filed on Form 20–F by foreign private 

issuers from six months to 90 days after 

the issuer’s fiscal year-end in the case of 

large accelerated filers and accelerated 

filers, and to 120 days after the issuer’s 

fiscal year-end for all other issuers, after 

a two-year transition period. We also 

proposed similar conforming 

amendments for transition reports filed 

on Form 20–F when a foreign private 

issuer changes its fiscal year. 

In the Proposing Release, we noted 

that technological advances have made 

it easier for companies to process and 

disseminate information quickly. 

Investors also evaluate and react to 

information in a shorter timeframe, and 

many now expect to receive information 

on a faster basis. Although some 

information about foreign private 

issuers is available through their 

earnings releases and other 

announcements, investors currently 

may not have access to the more 

complete disclosure contained in an 

issuer’s Form 20–F annual report until 

six months after the end of the issuer’s 

fiscal year. Although the longer filing 

due date for these reports was initially 

established as an accommodation to the 

different disclosure requirements in the 

foreign private issuers’ home 

jurisdictions,53 many companies that 

operate globally gather and evaluate 

information on a vastly expedited basis 

compared to almost 30 years ago, when 

Form 20–F was adopted. As a result, 

such a delayed filing date for these 

reports is no longer necessary. In the 

Proposing Release, we also noted that 

foreign private issuers in many 

jurisdictions are expected to file annual 

reports with their home securities 

regulator on a faster timetable.54

We received 49 comment letters on 

the proposed amendments. Some 

commenters expressed support for the 

accelerated deadlines as proposed. One 

of these commenters, a professional 

association of investment 

professionals,55 urged the Commission 

to move toward requiring the same 

filing requirements for foreign private 

issuers as for domestic issuers. This 

commenter noted that the value of 

information in financial statements 

decreases as the gap between the date of 

the financial statements and the date of 

their release increases. This commenter 

also noted that recently the financial 

position of some companies has 

deteriorated significantly over relatively 

short periods of time. Outdated 

financial information may make it more 

likely that investors will misjudge both 

the viability of the issuer and the value 

of its securities. Another supportive 

commenter, an accounting firm,56 noted 

that accelerating the deadline for Form 

20–F would provide investors with 

timelier and more useful information. It 

also noted that the overwhelming 

majority of foreign private issuers’ home 

country securities regulators already 

have annual report deadlines of either 

three or four months. However, this 

commenter pointed out that although a 

90-day reporting deadline for 

accelerated and large accelerated filers 

would be earlier than their home 

country deadlines for some issuers, this 

would still be an accommodation 

compared to the deadlines of 75 or 60 

days faced by their same-sized U.S. 

counterparts, respectively. This 

commenter also acknowledged that for 

foreign private issuers that are still 

required to reconcile home country 

GAAP to U.S. GAAP, a 90-day reporting 

deadline could impose additional, 

significant burdens. As a result, it 

recommended accelerating the deadline 

for these issuers to within 120 days after 

the foreign private issuer’s fiscal yearend. Another commenter, a foreign 

private issuer,57 supported the proposed 

amendments and indicated that it 

believed that the amendments would 

not impose any unreasonable burdens 

on foreign registrants. However, it also 

expressed concern about accelerating 

the reporting deadline for financial 

statements of non-registrants that are 

included in the Form 20–F, especially 

those required to be filed pursuant to 

Rule 3–09 58 of Regulation S–X. 

We received many more comments 

expressing concerns about the proposed 

due dates. Several commenters noted 

that the burdens faced by foreign issuers 

in producing Form 20–F was not related 

to size (i.e., accelerated or nonaccelerated filer), but to whether the 

issuer needs to produce a second set of 

full financial statements in accordance 

with U.S. GAAP, or a reconciliation 

from their home country accounts to 

U.S. GAAP.59 Commenters noted that 

the proposal could create a burden for 

many issuers that are still required to 

prepare their financial statements in 

accordance with local GAAP, especially 

those from some of the emerging 

markets.60 In addition, in certain 

jurisdictions, bank issuers are required 

to prepare their primary financial 

statements in accordance with local 

GAAP.61 We also received comments 

that Industry Guide 3, Statistical 

Disclosure by Bank Holding Companies, 

calls for additional disclosures, as well 

as the classification and disclosure of 

certain information under different 

standards than required in the foreign 

private issuer’s home country.62

Commenters also noted that many 

foreign private issuers need more time 

than provided under the proposed 

amendments to translate local financial 

information into English for Form 20– 

F; 63 to provide the additional 

disclosures of Form 20–F, such as Item 

5 (Operating and Financial Review and 

Prospects) and the Commission’s 

industry guide disclosures; and to 

satisfy certain requirements of the 

Sarbanes-Oxley Act.64 Commenters 

noted that many foreign private issuers 

have limited resources, and must use 

the same staff to comply with both local 

filing requirements and the 

Commission’s filing requirements. As a 

result of the proposed amendments, the 

staff of these issuers would have to 

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65See, e.g., comment letters from Linklaters 

(noting that the 90-day due date is earlier than the 

annual report due dates required by the EU Member 

States, China and Brazil) and Gold Fields Limited 

(noting that the Johannesburg Stock Exchange 

requires listed issuers to publish annual financial 

statements within six months after the end of the 

issuer’s financial year). 

66See comment letters from The Royal Bank of 

Scotland Group (recommending a due date two to 

three weeks after the annual report deadline in the 

issuer’s home jurisdiction), European Issuers 

(recommending a due date that is one month after 

the due date for annual reports in the issuer’s home 

country), PetroChina Company Limited 

(recommending a due date that is two months after 

the issuer’s annual report due date in its home 

country). 

67See, e.g., comment letters from Cleary Gottlieb 

and Mitsubishi. 

68We are not adopting a similar acceleration in 

the filing deadline for annual reports filed on Form 

40–F, which is used by eligible Canadian issuers 

under the MJDS. Under the MJDS, issuers who file 

annual reports on Form 40–F must comply with the 

substantive disclosure requirements and filing 

deadlines established by the relevant Canadian 

securities regulator. In keeping with the purpose of 

MJDS, which is to facilitate cross-border capital 

flows between the United States and Canada by 

streamlining the registration and periodic reporting 

process for cross-border issuers, the Form 40–F 

must continue to be filed with the Commission on 

the same day that the information is due to be filed 

with the relevant Canadian securities regulatory 

authority, as set forth in General Instruction D.(3) 

of Form 40–F. However, we note that a reporting 

Canadian issuer that is not a ‘‘venture issuer’’ must 

file its annual financial statements on or before 90 

days after its most recently completed financial 

year-end, while all other Canadian issuers must file 

their annual financial statements on or before 120 

days after their most recently completed financial 

year-end. See supra note 54. 

69See, e.g., comment letters from ABA, E&Y, and 

Linklaters. 

70Release No. 33–8879, supra note 21. 

71Under Item 8.A.4. of Form 20–F, the last year 

of audited financial statements may not be older 

than 15 months at the time of the offering or listing. 

72 17 CFR 249.310. 

73See General Instructions A.(2)(a) and (b) of 

Form 10–K. At the time that we first adopted rule 

and form amendments to accelerate the filing of the 

quarterly and annual reports of reporting U.S. 

issuers, we noted that those amendments would 

increase the discrepancy in the due dates for filing 

annual reports between foreign private issuers and 

larger seasoned U.S. issuers, and indicated that we 

would continue to consider this issue. Release No. 

33–8128 (Sept. 5, 2002) [67 FR 58480] 

74See General Instruction A.(2)(c) of Form 10–K. 

75See Release No. 33–8128, supra note 73. 

produce financial information for home 

country purposes on the same timetable 

as for Form 20–F, rather than in 

seriatim, as is currently the case. 

In addition, commenters indicated 

that in some cases the proposed due 

dates would require foreign private 

issuers to file their Form 20–F before 

they are required to file their annual 

reports in their home country. The 

proposed due dates would in effect 

override domestic filing requirements.65

Commenters noted that when foreign 

private issuers complete their annual 

reports for home country filing 

purposes, they furnish significant 

financial information to the Commission 

on Form 6–K, often within 90 days after 

their fiscal year-end. These commenters 

asserted that investors typically make 

investment decisions based on the fiscal 

year-end financial results disclosed in 

Form 6–K or through the issuer’s press 

releases, rather than through the Form 

20–F. 

Several commenters recommended 

that the Commission adopt a deadline 

that was linked to the foreign private 

issuer’s home country requirements for 

filing annual reports. These commenters 

suggested that foreign private issuers be 

required to file Form 20–F annual 

reports within a specified period after 

the issuer’s home country report is 

filed.66 Others, recognizing that such a 

deadline would be difficult to 

implement and confusing to investors, 

recommended that the Commission 

accelerate the due date for Form 20–F 

for all foreign private issuers to five 

months after the issuer’s fiscal yearend.67

After carefully considering all of the 

comments, as well as the benefits to 

investors of timelier annual reports, we 

are adopting amendments to accelerate 

the due date for annual reports filed on 

Form 20–F, but with modifications from 

the proposed amendments that respond 

to some of the concerns that were 

expressed. Under the amendments as 

adopted, all foreign private issuers will 

be required to file their annual reports 

on Form 20–F within four months after 

their fiscal year-end, regardless of their 

size, after a three-year transition 

period.68 As discussed above, 

commenters indicated that the size of 

the issuer would not affect its ability to 

file Form 20–F on an expedited basis. 

Rather, the issue was whether the 

foreign private issuer was required to 

prepare a second set of full financial 

statements in accordance with U.S. 

GAAP, or a reconciliation from their 

home country accounts to U.S. GAAP.69

In determining that a four-month due 

date would be appropriate, we note that 

in the next several years a majority of 

the foreign private issuers who file 

annual reports with the Commission 

will have incentives to use IFRS as 

issued by the IASB as more countries 

adopt IFRS as their basis of accounting, 

or permit companies to use IFRS as 

issued by the IASB as their basis of 

accounting. Our recent rule 

amendments that allow foreign private 

issuers to file financial statements in 

accordance with IFRS, as issued by the 

IASB, without a U.S. GAAP 

reconciliation should make it easier for 

many foreign private issuers to prepare 

their annual reports on Form 20–F.70 As 

indicated in the Proposing Release, we 

did not propose amendments to change 

the age of financial statement 

requirements for registration statements 

under the Securities Act or Exchange 

Act.71

The new due date also reflects our 

observation that many foreign private 

issuers registered with the Commission 

have a three-month due date for filing 

annual reports in their home country, 

and would be accorded an additional 

month after their home country due 

dates to prepare the Form 20–F under 

the new amendments. We note that, 

based on a review of recent filings, a 

number of foreign private issuers 

already file their annual reports on 

Form 20–F well before the current sixmonth deadline. In addition, the new 

due date for Form 20–F will still 

provide a substantial accommodation to 

many foreign private issuers, since large 

accelerated and accelerated domestic 

filers are required to file annual reports 

on Form 10–K 72 within 60 days and 75 

days, respectively, of their fiscal yearends.73 All other domestic issuers are 

required to file annual reports on Form 

10–K within 90 days after their fiscal 

year-end.74 We will continue to monitor 

market developments to consider 

whether it would be appropriate to 

accelerate further the due date for Form 

20–F annual reports. 

The amendments that we are adopting 

today reflect our view that annual 

reports that are filed on a faster basis 

would not only provide investors with 

more timely access to these filings, but 

also improve the delivery and flow of 

reliable information to investors and the 

capital markets, thereby helping to 

improve the efficiency of the markets. 

The accelerated deadline for Form 20– 

F should enable investors in the U.S. 

markets to get annual reports on a more 

current basis. As the Commission noted 

when it adopted the accelerated filing 

dates for periodic reports filed by 

domestic issuers,75 investors and 

analysts evaluate the more extensive 

information provided in periodic 

reports against the incremental 

disclosures that are made by an issuer. 

The accelerated due date will enable 

this analysis to take place at an earlier 

time. 

Although various commenters 

recommended that the Form 20–F 

annual report due date be linked in 

some manner to the foreign private 

issuer’s annual report due date in its 

home country, we concluded that this 

would be confusing for investors and 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58307 

76This difficulty would be especially evident for 

foreign private issuers that are listed only in the 

United States and are not subject to another 

securities regulatory reporting regime. 

77Under Exchange Act Rule 15d–2, a special 

financial report must be filed if a registrant’s 

Securities Act registration statement did not contain 

certified financial statements for its last full fiscal 

year preceding the fiscal year in which the 

registration statement became effective. Currently, 

foreign private issuers must file this special 

financial report by the later of 90 days after the date 

on which the registration statement became 

effective, or six months after the end of the 

registrant’s latest full fiscal year (consistent with the 

current due date of Form 20–F annual reports). 

78See Release No. 33–7026 (Nov. 3, 1993) [58 FR 

60304]. 

79We also took this approach when we adopted 

amendments to accelerate the periodic report filing 

dates for domestic companies. See Release No. 33– 

8128, supra note 73; Release No. 33–8644 (Dec. 21, 

2005) [70 FR 76626] (adopting further refinements 

to the acceleration rules). See also Release No. 33– 

6823 (Mar. 13, 1989) [54 FR 10306] (conforming the 

transition report rules to the periodic report rules). 

80 17 CFR 240.13e–3. 

81Release No. 34–55540, supra note 28. 

82A ‘‘Rule 13e–3 transaction’’ is defined as (i) a 

purchase of any equity security by the issuer of 

such security or by an affiliate, (ii) a tender offer, 

(iii) a proxy solicitation or information statement 

distribution in connection with a merger or similar 

transaction, (iv) the sale of substantially all the 

assets of an issuer to its affiliate, or (v) a reverse 

stock split. 17 CFR 240.13e–3(a)(3)(i). 

83 15 U.S.C. 78o(d). 

84 17 CFR 240.13e–100. 

85 17 CFR 240.13e–3(f). 

would be difficult to implement.76 We 

also concluded that a due date that is 

five months after the foreign private 

issuer’s fiscal year-end would not 

address our concerns about providing 

more timely information to investors. 

As discussed previously, we received 

several comments about the potential 

burdens placed on foreign private 

issuers that provide disclosures under 

Industry Guide 3, which relates to bank 

holding companies. We note that the 

Commission’s staff will consider what 

accommodations with regard to Industry 

Guide 3 would be appropriate. 

When we proposed the amendments, 

we proposed a two-year transition 

period for implementation of the 

accelerated deadline, but also solicited 

comments on whether a different 

transition period would be more 

appropriate. While we received several 

comments supporting a two-year 

transition period, several commenters 

noted that a three-year transition period 

would ease the burden on many foreign 

private issuers that will be required to 

adopt IFRS for home country reporting 

purposes in 2011. After considering all 

of the comments received, we have 

decided to provide a three-year 

transition period for implementation of 

the accelerated Form 20–F due date. As 

adopted, foreign private issuers will be 

required to file their annual report on 

Form 20–F within four months after 

their fiscal year-end for fiscal years 

ending on or after December 15, 2011. 

Of course, foreign private issuers may 

file their Form 20–F annual reports 

earlier than the current deadline, as 

numerous issuers now do. 

In addition to these amendments, we 

are adopting amendments that conform 

the deadline for transition reports filed 

on Form 20–F, and for the filing of 

special financial reports 77 pursuant to 

Rule 15d–2 of the Exchange Act. The 

deadlines for these reports were based 

on the annual report deadlines for 

foreign private issuers.78 We are 

amending the due dates for each of 

these reports so that they are consistent 

with the new deadline for annual 

reports filed on Form 20–F.79

C. Segment Data Disclosure 

Under Item 17 of Form 20–F, foreign 

private issuers that present financial 

statements otherwise fully in 

compliance with U.S. GAAP may omit 

segment data from their financial 

statements, and also are permitted to 

have a qualified U.S. GAAP audit report 

as a result of this omission. We 

proposed an amendment to Form 20–F 

that would eliminate this narrow 

accommodation. 

Most of the comments received on 

this proposal supported the proposed 

amendments. However, several 

commenters suggested permitting a 

longer transition period to the new 

rules. For example, a few commenters 

recommended a three-year transition 

period, so that the amendment would be 

effective for fiscal years on or after 

December 15, 2011 to align the effective 

date with the timeframe in which many 

jurisdictions will mandate IFRS 

reporting. 

After considering all of the comments 

and noting that approximately five 

foreign private issuers in the past few 

years have used this accommodation, 

we have decided to adopt the 

amendment as proposed. Foreign 

private issuers will be required to 

comply with the amendment beginning 

with their first fiscal years ending on or 

after December 15, 2009. The delayed 

compliance date will provide foreign 

private issuers with sufficient time to 

establish internal procedures that will 

enable them to obtain the required 

information. We are amending Item 17 

of Form 20–F by removing Instruction 3 

to that Form, which currently permits 

the omission of segment data from U.S. 

GAAP financial statements. We believe 

that an accommodation that permits a 

few foreign private issuers to present 

incomplete and non-compliant U.S. 

GAAP financial statements is no longer 

necessary or appropriate, especially 

given recent international developments 

in financial reporting. For example, in 

order to file financial statements 

without reconciliation to U.S. GAAP, 

foreign private issuers must comply 

fully with IFRS as issued by the IASB, 

including presentation of segment data. 

Accordingly, we have decided not to 

provide a longer transition period for 

the new amendment. 

D. Exchange Act Rule 13e–3 

We are adopting amendments to 

Exchange Act Rule 13e–3,80 which 

pertains to going private transactions by 

reporting issuers or their affiliates, to 

reflect the recently adopted rules 

pertaining to the ability of foreign 

private issuers to terminate their 

Exchange Act registration and reporting 

obligations.81 Currently, Rule 13e–3 is 

triggered when an issuer and/or any of 

its affiliates are engaged in a specified 

transaction or series of transactions 82

that have either a reasonable likelihood 

or a purpose of causing (i) any class of 

equity securities of the issuer that is 

subject to Section 12(g) or Section 

15(d) 83 of the Exchange Act to be held 

of record by less than 300 persons, or 

(ii) the securities to be neither listed on 

any national securities exchange nor 

authorized to be quoted on an interdealer quotation system of any 

registered national securities 

association. 

Rule 13e–3 requires any issuer or 

affiliate that engages in a Rule 13e–3 

transaction to file a Schedule 13E–3 84

disclosing its plan to take the company 

private, and to make prompt 

amendments to reflect certain 

information about the proposed 

transaction. In the Schedule 13E–3, the 

filing party must disclose the purposes 

for the transaction, whether any 

alternative means for accomplishing the 

stated purposes were considered, the 

reasons for the structure of the 

transaction and why it was being 

undertaken at the time, the effects that 

the transaction would have on the issuer 

and its unaffiliated security holders, 

whether or not the filing party believes 

the transaction is fair to unaffiliated 

security holders, and the factors 

considered in determining fairness. Rule 

13e–3(f) 85 also requires dissemination 

of the information required by Schedule 

13E–3 to security holders within 

specified time periods. 

When the Commission adopted Rule 

13e–3, we emphasized that the Rule 

would be triggered only if a specified 

transaction has either the reasonable 

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58308 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

86Release No. 34–16075 (Aug. 2, 1979) [44 FR 

46736]. 

87Release No. 34–55540, supra note 28. 

88See comment letters from Cleary Gottlieb and 

The Hundred Group of Finance Directors 

(‘‘Hundred Group’’). 

89Release No. 34–16075, supra note 86. The Rule 

13e–3 adopting release explained that the Rule was 

intended to apply when one of the transactions 

identified in the Rule was undertaken with a 

purpose of or had a reasonable likelihood of 

terminating the issuer’s reporting obligations and 

consequently depriving security holders of the 

benefits of public ownership. See subsection (a) 

under ‘‘Discussion.’’ 

90We understand that a trading market may not 

exist in the U.S. for the shares of a foreign private 

issuer. For purposes of the Williams Act, ADRs and 

similar instruments that represent an ownership 

interest in a class of securities are not considered 

a class of securities separate from the foreign 

private issuer’s underlying shares. See Release No. 

33–6894 (May 23, 1991) [56 FR 24420] at Section 

II.D.2. 

91 17 CFR 240.13e–3(a)(3)(ii). See also Release No. 

34–14185 (Nov. 17, 1977) [42 FR 60090]. The Rule 

13e–3 proposing release explains, ‘‘In his testimony 

before Congress on the provision that was to 

become Section 13(e)(1), then Commission 

Chairman Cohen recognized that, while there might 

be ‘perfectly legitimate corporate purposes’[ ] for a 

corporation to purchase its own securities, 

purchases by a corporation of its own securities can 

be used to affect the control of the corporation. The 

management may cause the corporation to 

repurchase shares for the purpose of preserving or 

improving the management’s control position or to 

counteract the tender offer or other takeover bid.’’ 

See Hearings on S. 510 Before the Subcomm. on 

Securities of the Senate Comm. on Banking and 

Currency, 90th Cong., 1st Sess. 37 (1967) (‘‘Senate 

Hearings’’) Hearing on H.R. 14475, S. 510 Before the 

Subcomm. on Commerce and Finance of the House 

Comm. on Interstate and Foreign Commerce 15 

(1967) (‘‘House Hearings’’). 

92Release No. 34–16075, supra note 86. 

93 17 CFR 240.13e–3(a)(3)(ii)(A). 

94 17 CFR 240.12g–4. 

95 17 CFR 240.12h–6. 

96 17 CFR 240.12h–3. 

97We have made a technical modification to the 

proposed amendments to Rule 13e–3 to make clear 

that the Rule may be triggered when a domestic or 

foreign private issuer’s Section 15(d) reporting 

obligations are suspended pursuant to Section 15(d) 

or Exchange Act Rule 12h–3. 

likelihood or purpose of causing the 

termination of reporting obligations 

under the Exchange Act.86 Recently, we 

adopted amendments to the 

deregistration provisions applicable to 

foreign private issuers that would 

permit them to terminate their reporting 

obligations under the Exchange Act by 

meeting a quantitative benchmark 

designed to measure relative U.S. 

market interest for their equity 

securities that does not depend on a 

head count of the issuers’ U.S. security 

holders.87 Although Rule 13e–3 does 

not reflect the termination of 

registration and reporting provisions 

that were previously applicable to 

foreign private issuers, we proposed to 

amend the Rule to better reflect the 

current deregistration provisions. 

We received several comments on this 

proposal supporting our efforts to 

amend Rule 13e–3 to make it consistent 

with the recently adopted termination of 

reporting and deregistration provisions. 

However, two commenters expressed 

concern that the Rule could be triggered 

by securities transactions in the 

ordinary course of business, such as 

share repurchases.88 One commenter 

also suggested that the disclosures in 

Schedule 13E–3 regarding fairness to 

unaffiliated security holders would not 

apply in the context of deregistration of 

a foreign private issuer, especially when 

the applicable corporate law does not 

require such determinations, and 

requested an instruction to the Schedule 

that would recognize this circumstance. 

We also received two comments 

suggesting that the Rule should not 

apply to a foreign private issuer whose 

shares will be traded on a foreign 

securities exchange, and hence subject 

to home country and/or foreign 

securities exchange reporting 

obligations, because its home country 

disclosures will continue to be available 

and furnished to the Commission 

pursuant to Rule 12g3–2(b). One 

commenter also cited concerns that the 

application of the Rule could deter the 

entry of foreign private issuers into the 

U.S. markets. 

At this time, we believe that 

amending Rule 13e–3 as proposed will 

modernize one of the Rule’s two 

specified going private effects and 

assure that the Rule operates 

consistently with an important policy 

purpose expressed at its initial 

adoption.89 By substituting a test foreign 

private issuers already use to deregister 

a class of securities in place of the ‘‘300 

person’’ test, foreign private issuers will 

benefit from simplicity and uniformity 

when making decisions to exit the U.S. 

reporting system. In addition, adopting 

the proposed amendment will provide 

clarity to a Rule that does not 

distinguish whether the cited effect is 

triggered when the number of holders of 

record is projected to fall below 300 

persons in the United States or 

worldwide. Amending Rule 13e–3 will 

eliminate the need to interpret its 

indefinite reference to ‘‘held of record 

by less than 300 persons.’’ 

We believe that adoption of the 

proposed amendment to Rule 13e– 

3(a)(3)(ii)(A) should have a neutral 

effect on foreign private issuers. As is 

the case under Rule 13e–3 today, foreign 

private issuers will remain eligible 

under the amended Rule to voluntarily 

take steps to deregister a class of 

securities without implicating Rule 13e– 

3. We also do not believe share 

repurchases made in the ordinary 

course of an issuer’s business are within 

the scope of Rule 13e–3, as amended, 

when such transactions are not 

undertaken with the purpose or 

reasonable likelihood of producing one 

of the two going private effects specified 

in Rule 13e–3.90 Currently, share 

repurchases are only required to comply 

with Rule 13e–3 to the extent 

undertaken with a purpose or with a 

reasonable likelihood of producing one 

of the two going private effects 

identified in Rule 13e–3.91 Because the 

amendment only seeks to provide 

regulatory consistency with the new 

deregistration and termination of 

reporting provisions, Rule 13e–3, as 

amended, will continue to govern share 

repurchases made in the ordinary 

course of an issuer’s business only when 

such repurchases are executed with the 

purpose or reasonable likelihood of 

causing security holders to lose ‘‘the 

benefits of public ownership,’’ 92 and in 

this case the benefits of U.S. reporting. 

Accordingly, we are adopting the 

amendment to Rule 13e–3(a)(3)(ii)(A) 93

as proposed. Under the amended Rule, 

the cited effect is deemed to have 

occurred when: A domestic or foreign 

private issuer becomes eligible under 

Exchange Act Rule 12g–4 94 to deregister 

a class of securities; a foreign private 

issuer becomes eligible under Exchange 

Act Rule 12h–6 95 to deregister a class of 

securities or terminate a reporting 

obligation; or such issuers become 

eligible under Exchange Act Rule 12h– 

3 96 or Exchange Act Section 15(d) to 

have a reporting obligation 

suspended.97

When a foreign private issuer or 

domestic issuer engages in a Rule 13e– 

3 transaction that would cause the 

termination or suspension of its 

registration or reporting obligations 

under the Exchange Act, Rule 13e–3 is 

intended to provide the issuer’s security 

holders with one last opportunity to 

obtain information about the issuer and 

consider their alternatives. This is 

equally true in the context of a foreign 

private issuer or domestic issuer that 

plans to complete one of the 

transactions specified in Rule 13e– 

3(a)(3) for purposes of deregistering a 

class of securities or terminating or 

suspending a reporting obligation as it 

is for a foreign private issuer or 

domestic issuer that has executed one of 

the specified Rule 13e–3(a)(3) 

transactions and is ceasing to file 

reports because the number of its 

shareholders falls below 300. 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58309 

98See Item 17(c)(2) of Form 20–F. 

99The Commission recently proposed 

amendments permitting foreign private issuers to 

comply with the less extensive U.S. GAAP 

reconciliation requirements under Item 17 in a 

registration statement or private offering document 

if the issuer met the proposed new Form F–3 

transaction eligibility criteria for registering primary 

offerings of non-convertible securities. The 

proposed eligibility criteria would eliminate the 

current requirement in Form F–3 of an investment 

grade rating by a nationally recognized statistical 

rating agency. Release No. 33–8940 (July 1, 2008) 

[73 FR 40106]. We requested comment on whether, 

if we decided not to eliminate the option of 

providing Item 17 financial disclosure, we should 

revise the Form F–3 eligibility requirements as 

proposed. Id. at Section II.B.2. 

100See, e.g., comment letter from the CFA 

Institute. 

101See, e.g., comment letter from Cleary Gottlieb. 

102 17 CFR Part 210.1–01 et seq. 

103Under Item 17, an issuer is not required to 

provide the footnote disclosures required by U.S. 

GAAP and Regulation S–X, unless these disclosures 

are otherwise required under its home country 

GAAP. For example, the footnote disclosures 

related to pension assets, obligations and 

assumptions, lease commitments, business 

segments, tax attributes, stock compensation 

awards, financial instruments and derivatives, 

among many others, are not required under Item 17 

unless they are otherwise required by the issuer’s 

home country GAAP. 

104A foreign private issuer’s latest annual report 

filed on Form 20–F and all subsequent Form 20– 

F annual reports are incorporated by reference into 

its Form F–3 shelf registration statement. See Item 

6 (Incorporation of Certain Information by 

Reference) in Form F–3. General Instruction I.B.1. 

of Form F–3 requires foreign private issuers to 

provide financial statements that comply with Item 

18 for primary offerings. 

105 17 CFR 210.3–05. 

106A guarantor that is required to file separate 

financial statements must comply with Item 18. 

107 17 CFR 210.3–10(i). 

108See comment letters from BDO Seidman, LLP 

(‘‘BDO’’), Center for Audit Quality (‘‘CAQ’’), 

Deloitte Touche Tohmatsu (‘‘Deloitte’’), E&Y, Grant 

Thornton LLP (‘‘Grant Thornton’’), KPMG IFRG 

Limited (‘‘KPMG’’), and PricewaterhouseCoopers 

LLP (‘‘PricewaterhouseCoopers’’). 

E. Requiring Item 18 Reconciliation in 

Annual Reports and Registration 

Statements 

We are adopting amendments to 

eliminate the option to provide financial 

statements according to Item 17 of Form 

20–F in annual reports and registration 

statements filed on that form. Currently, 

a foreign private issuer that is only 

listing a class of securities on a national 

securities exchange, or only registering 

a class of securities under Exchange Act 

Section 12(g), without conducting a 

public offering of those securities may 

provide financial statements according 

to Item 17 of Form 20–F. In addition, 

foreign private issuers may provide 

financial statements according to Item 

17 for their annual reports on Form 20– 

F. Under Item 17, a foreign private 

issuer must prepare its financial 

statements and schedules in accordance 

with U.S. GAAP, or IFRS as issued by 

the IASB. If its financial statements and 

schedules are prepared in accordance 

with another basis of accounting, the 

issuer must include a reconciliation to 

U.S. GAAP. This reconciliation must 

include a narrative discussion of 

reconciling differences, a reconciliation 

of net income for each year and any 

interim periods presented, a 

reconciliation of major balance sheet 

captions for each year and any interim 

periods, and a reconciliation of cash 

flows for each year and any interim 

periods.98 In contrast, if a foreign 

private issuer that presents its financial 

statements on a basis other than U.S. 

GAAP, or IFRS as issued by the IASB, 

provides financial statements under 

Item 18 of Form 20–F, it must provide 

all the information required by U.S. 

GAAP and Regulation S–X, in addition 

to the reconciling information for the 

line items specified in Item 17. 

To eliminate this distinction between 

the disclosure provided to the primary 

and secondary markets, we proposed 

amendments to require Item 18 

information for foreign private issuers 

that are only listing a class of securities 

on an exchange, or only registering a 

class of securities under Exchange Act 

Section 12(g), without conducting a 

public offering. We also proposed 

amendments to require Item 18 

information for foreign private issuers 

that file annual reports on Form 20–F. 

In addition, foreign private issuers 

that are making certain non-capital 

raising offerings, such as offerings 

pursuant to reinvestment plans, 

offerings upon the conversion of 

securities or offerings of investment 

grade securities,99 currently are 

permitted to provide Item 17 financial 

statements in their registration 

statements under the Securities Act. To 

ensure that the same type of financial 

information is provided regardless of 

the type of offering that is being made, 

we proposed amendments to require 

foreign private issuers to file financial 

statements that comply with Item 18 

when registering these types of offerings 

under the Securities Act. 

Many commenters supported the 

proposals as useful to investors. 

Commenters noted that the amendments 

would help ensure that investors receive 

the complete financial information 

required by U.S. GAAP and Regulation 

S–X.100 However, several other 

commenters expressed concern about 

the benefits of the amendments in light 

of the potential compliance burdens. 

They also asserted that other countries 

are gradually requiring footnote 

disclosures comparable in scope to U.S. 

GAAP and Regulation S–X, such that 

the proposed amendments are not 

necessary.101

After carefully considering all of the 

comments, we are adopting the 

amendments as proposed. We believe 

that a reconciliation that includes the 

footnote disclosures required by U.S. 

GAAP and Regulation S–X 102 can 

provide important additional 

information.103 We also note that the 

majority of foreign private issuers who 

do not prepare financial statements in 

accordance with U.S. GAAP elect to 

provide financial information pursuant 

to Item 18, rather than Item 17, of Form 

20–F.104 Under the amendments, Form 

20–F and the registration statement 

forms available to foreign private issuers 

under the Securities Act (Forms F–1, F– 

3 and F–4) will require the disclosure of 

financial information according to Item 

18 of Form 20–F for registration 

statements filed under both the 

Exchange Act and the Securities Act, as 

well as for annual reports. 

When we proposed the amendments, 

we did not propose eliminating the 

availability of Item 17 disclosures for 

Canadian MJDS filers in light of the 

special recognition accorded to MJDS 

filings. We also noted that more 

countries, including Canada, are 

expected to adopt IFRS as their basis of 

accounting, or to permit companies to 

use IFRS as issued by the IASB as their 

basis of accounting in the next few 

years. As a result, we concluded that it 

would not be appropriate to eliminate 

the availability of Item 17 in MJDS 

registration statements. We also 

proposed maintaining the availability of 

Item 17 for financial statements of nonregistrants that are required to be 

included in a foreign or domestic 

issuer’s registration statement, annual 

report or other Exchange Act report. 

These include significant acquired 

businesses under Rule 3–05 105 of 

Regulation S–X, significant equity 

method investees under Rule 3–09 of 

Regulation S–X, and exempt 

guarantors 106 under Rule 3–10(i) 107 of 

Regulation S–X. The commenters who 

commented on these accommodations 

supported them, so the amendments as 

adopted will not apply to MJDS filers or 

to the financial statements of nonregistrants. 

Several commenters who supported 

the proposed amendments 

recommended that we establish a 

compliance date that would provide 

foreign private issuers with a longer 

transition period before they would be 

required to prepare financial statements 

pursuant to Item 18.108 Among other 

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58310 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

109 17 CFR 249.210. 

110 In their annual reports on Form 10–K, 

domestic issuers do not provide the same type of 

change of accountant disclosure, since they should 

have reported this information on a more current 

basis on Form 8–K. However, they do provide the 

disclosures required by Item 304(b) of Regulation 

S–K [17 CFR 229.304(b)]. 

111 17 CFR 239.11. 

112 17 CFR 239.25. 

113See Release No. 33–6766 (Apr. 7, 1988) 

(adopting amendments to Form 8–K, Regulation S– 

K and Schedule 14A [17 CFR 240.14a–101] related 

to disclosure concerning a change in a registrant’s 

certifying accountant). 

114When we proposed the adoption of Form 20– 

F, we proposed a disclosure requirement soliciting 

information about changes in the registrant’s 

certifying accountant. Release No. 34–14128 (Nov. 

2, 1977) [42 FR 58684] (contained in proposed Item 

24). The disclosure item was not included in Form 

20–F. Form 20–F Adopting Release, supra note 18. 

115Section 204.03 of the NYSE Listed Company 

Manual. 

116See supra note 45 for a discussion of the 

differences between Forms 6–K and 8–K. 

117See comment letters from CAQ, Deloitte, 

Hundred Group, Linklaters, and Sullivan & 

Cromwell LLP. 

118See comment letters from AngloGold Ashanti 

Limited; BDO; CAQ; Deloitte; E&Y; Grant Thornton; 

Harmony Gold Mining Company Limited and 

PricewaterhouseCoopers. 

things, these commenters noted that the 

foreign private issuers that provide the 

Item 17 reconciliation in their annual 

reports tend to be smaller companies, 

and that these companies would face 

significant burdens on their financial 

accounting and reporting systems if they 

are required to provide the additional 

Item 18 disclosures, as well as comply 

with the accelerated due date for Form 

20–F, at the same time. In addition, they 

noted that many countries, such as 

Canada, will be adopting IFRS in 2011. 

Aligning the compliance date for the 

adopted amendments with the date on 

which many countries will be adopting 

IFRS would reduce the potential 

burdens on these issuers. 

For the reasons enumerated above, we 

are establishing a compliance date that 

should provide foreign private issuers 

with sufficient time to transition to the 

Item 18 requirements when preparing 

their financial statements. A foreign 

private issuer that currently prepares its 

financial statements according to Item 

17 of Form 20–F will not be required to 

prepare financial statements pursuant to 

Item 18 until it files an annual report for 

its first fiscal year ending on or after 

December 15, 2011. The longer 

transition period should reduce the 

impact of these amendments on many of 

the affected issuers. In addition, because 

foreign private issuers that prepare 

financial statements in accordance with 

IFRS, as issued by the IASB, are not 

required to prepare a reconciliation to 

U.S. GAAP, we expect that the number 

of companies that will be affected by the 

amendments will be small. 

F. Disclosure About Changes in a 

Registrant’s Certifying Accountant 

Domestic companies currently report 

any changes in and disagreements with 

their certifying accountant in a current 

report on Form 8–K and in a registration 

statement on Form 10 109 under the 

Exchange Act,110 as well as in their 

registration statements filed on Forms 

S–1 111 and S–4 112 under the Securities 

Act. Among other things, this disclosure 

provides information about potential 

opinion shopping situations by issuers. 

‘‘Opinion shopping’’ generally refers to 

the search for an auditor that is willing 

to support a proposed accounting 

treatment that is designed to help a 

company achieve its reporting 

objectives, even though that treatment 

could frustrate reliable reporting.113

Foreign private issuers have not been 

required to provide this disclosure.114

However, the issues underlying the 

need for this disclosure also apply to 

foreign private issuers, and the 

relationship between issuers and their 

auditors in this area would seem to be 

as important for investors. Moreover, 

foreign private issuers that are listed on 

the New York Stock Exchange (‘‘NYSE’’) 

are already required by that Exchange to 

notify the public about a change in their 

auditors,115 although this information is 

required to be furnished under cover of 

Form 6–K, which does not have the 

substantive disclosure requirements of 

Form 8–K.116 As a result, we proposed 

amendments that would require 

substantially the same types of 

disclosures currently provided by 

domestic issuers about changes in and 

disagreements with their certifying 

accountant. After reviewing the 

comment letters received on these 

proposed amendments, most of which 

were generally supportive, we are 

adopting the amendments substantially 

as proposed. As discussed below, in 

response to a question on this point in 

the Proposing Release, several 

commenters suggested that we extend 

this disclosure requirement to all 

registration statements, not just initial 

registration statements filed by foreign 

private issuers. We have modified the 

proposal accordingly. 

The few commenters who expressed 

opposition to the proposed 

amendments, either in whole or in part, 

expressed concern that foreign private 

issuers may be required to disclose more 

information about their former auditors 

in their Form 20–F annual reports than 

is required under their home country 

law.117 In addition, some commenters 

encouraged the Commission to research 

and evaluate whether compliance with 

the proposed requirements would be 

frustrated or precluded when the 

disclosure pertains to a foreign-based 

certifying accountant because of homecountry legal requirements, such as 

privacy laws. Other commenters 

recommended that we consider 

mechanisms to require foreign private 

issuers to provide the disclosure on a 

timelier basis than proposed. 

After considering all of the comments 

received, we believe that the 

amendments as proposed achieve an 

appropriate balance among all of the 

views that were expressed. Given the 

usefulness of the information to 

investors, we believe that foreign private 

issuers should be required to disclose 

substantially the same information 

provided by domestic issuers. Several 

commenters believed the value of the 

information to investors would be 

diminished by the potential time 

between the change in accountants and 

the proposed disclosure.118 We 

recognize that foreign private issuers 

will be disclosing the information on a 

delayed basis in their annual reports 

and registration statements, compared to 

the current basis required by domestic 

issuers. However, we do not believe it 

would be appropriate to adopt a 

separate current report requirement for 

foreign private issuers to report this 

information because they are already 

required to furnish to the Commission 

on Form 6–K the material information 

that they provide to their home country 

regulator, to their security holders and 

to the public. To the extent that 

information about a change in certifying 

accountant is required by the foreign 

private issuer’s home country, the 

information would be disclosed in a 

Form 6–K. Introducing an additional 

U.S. current report requirement outside 

of the traditional Form 6–K reporting 

requirements does not seem appropriate 

at this time. In addition, because the 

new disclosure requirement may require 

a foreign private issuer to disclose more 

information about its former auditors 

than may be required by its home 

country law, permitting foreign private 

issuers to prepare and provide the 

disclosure in their annual reports may 

help reduce the burdens of reporting 

this information. 

With respect to the concern expressed 

by some commenters regarding potential 

conflicts between the proposed 

disclosure and home country legal 

requirements, we note that we asked 

commenters to provide details of any 

restrictions under the foreign issuer’s 

home country law or regulations that 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58311 

119One commenter suggested that South African 

law may preclude such disclosures, see comment 

letter from Deloitte, but the four South African 

issuers that commented on the Proposing Release 

did not cite specific restrictions under South 

African law. 

120 Item 4.01 of Form 8–K. 

121 17 CFR 229.304(a). 

122 Item 9 of Form 10–K. 

123See comment letters submitted by CAQ, the 

CFA Institute, and KPMG. 

124 Item 304(a)(3) of Regulation S–K requires the 

issuer to provide a copy of the disclosures to the 

former accountant no later than the day that the 

disclosures are filed with the Commission. 17 CFR 

229.304(a)(3). 

125Under General Instruction C.(b) of Form 20– 

F, the information provided in a Form 20–F annual 

report should be as of the latest practicable date, 

unless a disclosure item in the Form explicitly 

directs otherwise. As a result, changes in the foreign 

private issuer’s certifying accountant that occur 

after the issuer’s fiscal year-end, but before the 

Form 20–F is filed, would be disclosed in the 

issuer’s Form 20–F annual report. 

126We noted the importance of transparency in 

fee disclosures in our 1991 ADR concept release, 

Release No. 33–6894, supra note 90. 

would prohibit an auditor from 

reporting to a foreign regulator about 

disagreements with the issuer. Most of 

the commenters did not provide any 

examples of home country law or 

regulations that would prohibit such 

disclosure, but suggested that we 

conduct further research about possible 

conflicts.119

As adopted, Item 16F of Form 20–F 

will elicit the same types of change of 

accountant disclosures obtained in Item 

4.01 (Changes in Registrant’s Certifying 

Accountant) of Form 8–K,120 including 

the disclosure requirements of Item 

304(a) of Regulation S–K,121 which are 

referenced in Form 8–K, and Item 9 

(Changes in and Disagreements with 

Accountants on Accounting and 

Financial Disclosure) of Form 10–K,122

which refers to the disclosure 

requirements of Item 304(b) of 

Regulation S–K. However, because 

foreign private issuers do not file Forms 

8–K and 10–K and are not otherwise 

subject to Item 304 of Regulation S–K, 

we are adopting amendments requiring 

them to provide disclosure about 

changes in and disagreements with their 

certifying accountants in their annual 

reports on Form 20–F, as well as in their 

registration statements filed on Forms 

20–F, F–1, F–3 and F–4. 

We are also adopting amendments to 

Forms F–1, F–3 and F–4, which are 

used to register public offerings of 

securities by foreign private issuers 

under the Securities Act, to require the 

new Item 16F disclosure requirement 

about the issuer’s changes in and 

disagreements with their certifying 

accountant. Although we had not 

proposed requiring Item 16F disclosure 

for repeat registrants, we solicited 

comments on whether this was 

disclosure that should be provided in 

connection with all registration 

statements filed by a foreign private 

issuer under the Securities Act. Some 

commenters supported this approach. 

They noted that this information would 

be useful in Securities Act registration 

statements filed by repeat issuers, 

especially if the change in accountant or 

disagreement occurred after the filing of 

the Form 20–F annual report and before 

the filing of the next Securities Act 

registration statement.123 As a result, we 

are adopting amendments to Forms F– 

1, F–3 and F–4 that will require Item 

16F disclosure by all registrants, 

including repeat issuers. We are also 

amending Form F–3 so that Item 16F 

disclosure will be provided in a 

registration statement at effectiveness, 

as well as in a prospectus used in 

connection with a shelf offering. 

New Item 16F requires substantially 

the same information required by Item 

304 of Regulation S–K, which contains 

the disclosure requirements applicable 

to domestic issuers. Among other 

things, Item 16F requires an issuer to 

disclose whether an independent 

accountant that was previously engaged 

as the principal accountant to audit the 

issuer’s financial statements, or a 

significant subsidiary on which the 

accountant expressed reliance in its 

report, has resigned, declined to stand 

for re-election, or was dismissed. Item 

16F also requires an issuer to disclose 

any disagreements or reportable events 

that occurred within the issuer’s latest 

two fiscal years and any interim period 

preceding the change of accountant. 

Item 16F(b) solicits disclosure about 

whether, during the fiscal year in which 

the change of accountants took place or 

during the subsequent year, the issuer 

had similar, material transactions to 

those which led to the disagreements 

with the former accountants, and 

whether such transactions were 

accounted for or disclosed in a manner 

different from that which the former 

accountants would have concluded was 

required. If so, Item 16F(b) requires the 

issuer to disclose the existence and 

nature of the disagreement or reportable 

event, and also to disclose the effect on 

the financial statements if the method 

that would have been required by the 

former accountants had been followed. 

Although the disclosure requirements 

contained in Item 16F are substantially 

similar to the disclosure requirements 

applicable to domestic issuers in Item 

304 of Regulation S–K, as proposed, we 

have eliminated or modified some of the 

due dates described in Item 304(a)(3) of 

Regulation S–K because the disclosure 

is being made on an annual, rather than 

on a current, basis. For example, 

although Item 16F would require the 

issuer to provide a copy of the 

disclosures that it is making in response 

to Item 16F to the former accountant, it 

would not require the issuer to provide 

the disclosures within the timeframe 

specified in Item 304(a)(3) of Regulation 

S–K.124 In addition, we expect that the 

former accountant would be able to 

furnish the issuer with a letter stating 

whether it agrees with the statements 

made by the issuer in response to Item 

16F and, if not, stating the respects in 

which it does not agree, and that the 

issuer would be able to file the former 

accountant’s letter as an exhibit to the 

annual report or registration statement 

that contains this disclosure at the time 

that the annual report or registration 

statement is due. Item 304(a)(3) 

provides that if the former accountant’s 

letter is not available at the time that the 

report or registration statement is filed, 

then the issuer can file the letter with 

the Commission within ten business 

days after the filing of the report or 

registration statement. Because foreign 

private issuers would be permitted to 

provide the disclosure in their annual 

reports, we believe that this 

accommodation would not be necessary 

unless the change in accountant 

occurred less than 30 days prior to the 

filing of the annual report 125 or 

registration statement. As adopted, Item 

16F would permit a delayed filing of the 

former accountant’s letter in an annual 

report or registration statement only if 

the change in accountant occurred 

within this 30-day timeframe. 

Foreign private issuers will be 

required to comply with the 

amendments beginning with their first 

fiscal year ending on or after December 

15, 2009. The delayed compliance date 

should provide these issuers and their 

accountants with sufficient time to 

establish internal procedures that will 

enable them to comply with the new 

requirements. 

G. Annual Disclosure About ADR Fees 

and Payments 

We are adopting amendments that 

will require foreign private issuers to 

disclose information about the fees and 

other charges paid in connection with 

ADR facilities in their annual reports on 

Form 20–F.126 We proposed these 

amendments because we believe that 

ADR holders can benefit from enhanced 

disclosure in this area, especially in 

light of new depositary fees that are 

being charged to ADR holders in 

connection with sponsored ADR 

facilities. These new fees include an 

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58312 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

127See Release No. 34–53978 (June 13, 2006) [71 

FR 35474] (notice of NYSE rule change to eliminate 

the requirement that certain services be provided 

without charge to ADR holders). 

128As a technical matter, an ADR is the physical 

certificate that evidences American Depositary 

Shares (‘‘ADS’’), and an ADS is the security that 

represents an ownership interest in deposited 

securities. However, the terms are often used 

interchangeably by market participants. 

129Rule 12a–8 [17 CFR 240.12a–8] exempts 

depositary shares registered on Form F–6 [17 CFR 

239.36] under the Securities Act, but not the 

underlying deposited securities, from the operation 

of Section 12(a) of the Exchange Act [15 U.S.C. 

78l(a)]. 

130See, e.g., comment letters from the ABA, The 

Bank of New York Mellon, and Deutsche Bank. 

131See, e.g., the comment letter from Depositary 

Management Corporation. 132See id. 

133See Section 303A.00 of the NYSE Listed 

Company Manual (noting that foreign private 

issuers are permitted to follow home country 

practice instead of the applicable corporate 

governance provisions of the NYSE Listed Company 

Manual, except for the requirements pertaining to 

audit committees, certain certifications, and certain 

corporate governance disclosures); Section 

4350(a)(1) of the Nasdaq Manual (noting that 

requirements pertaining to audit committees and 

audit opinions apply, among other things); and 

Section 110 of the Amex Company Guide (stating 

that in evaluating the listing application of a foreign 

private issuer, ‘‘the Exchange will consider the 

laws, customs and practices of the applicant’s 

country of domicile, to the extent not contrary to 

the federal securities laws’’). 

134See Section 303A.11 of the NYSE Listed 

Company Manual; Section 4350(a)(1) of the Nasdaq 

Manual; and Section 110 of the Amex Company 

Guide. 

annual fee for general depositary 

services, a fee that was formerly 

prohibited by some exchanges.127

Although ADR fees are disclosed in the 

ADR itself,128 ADR holders frequently 

purchase their ADRs in bookentry form 

and do not see the disclosures provided 

in the physical certificate. 

Many commenters on the proposed 

amendments supported the disclosure 

of the ADR fees paid by ADR holders, 

noting that complete and regular 

disclosure of these fees is important in 

light of their impact on investors. A few, 

however, noted that these fees are 

already disclosed in the deposit 

agreement, on the Form F–6 registration 

statement filed to register the ADRs with 

the Commission under the Securities 

Act, as well as in the Form 20–F that is 

filed to register the deposited securities 

under the Exchange Act.129 After 

considering these comments, we have 

concluded these ADR fees are 

significant enough to warrant enhanced 

transparency to investors on an annual 

basis and will present a minimal 

additional disclosure burden on foreign 

private issuers. 

We received a variety of comments in 

reaction to the proposed disclosure 

requirement regarding payments made 

by depositary banks to the foreign 

private issuers whose securities 

underlie the ADRs. Some commenters 

expressed concern that the disclosure 

would have a detrimental effect on the 

ADR market, would constitute 

commercially sensitive proprietary 

information, and would be immaterial 

to investors.130 Other commenters, 

however, noted that disclosure of such 

payments would limit the risk that 

depositary banks would attempt to 

defray the incentive payments through 

increased charges to ADR holders.131

One commenter suggested that 

disclosure of the aggregate amount of 

incentive payments made to issuers by 

depositaries, rather than detailed 

disclosure of each payment, would 

avoid undermining competition among 

depositaries.132

After considering all of these 

comments, we are adopting the 

amendments to Form 20–F as proposed. 

The amendments to Form 20–F revise 

Item 12.D.3. and the Instructions to Item 

12 to solicit disclosure of the fees paid 

by ADR holders on an annual basis, 

including the annual fee for general 

depositary services. In addition, foreign 

private issuers will be required to 

disclose the payments that they have 

received from depositaries in 

connection with their ADR programs. 

Because we believe that the value of the 

information provided would be 

diminished if it was provided only on 

an aggregate basis, issuers must disclose 

the information on a per payment basis. 

We believe that information about the 

types of payments made by depositaries 

to issuers would be useful to investors 

because it would enable them to 

understand the purpose of the 

payments. The amendments to Item 

12.D.3. and the Instructions to Item 12 

of Form 20–F will require disclosure of 

these payments in the registration 

statement on Form 20–F that is filed for 

the deposited securities, as well as in 

the annual report, for sponsored ADR 

facilities. 

To address the concerns about the 

disclosure of incentive payments made 

by depositaries to foreign issuers, a 

foreign private issuer will not be 

required to disclose this information 

until it files its annual report for its first 

fiscal year ending on or after December 

15, 2009. This should permit depositary 

banks and foreign issuers to make 

appropriate contractual arrangements, 

as necessary, in light of the new 

disclosure requirements. 

H. Disclosure About Differences in 

Corporate Governance Practices 

We proposed amendments that would 

require listed foreign private issuers to 

disclose in their Form 20–F annual 

reports the significant ways in which 

their corporate governance practices 

differ from the practices followed by 

domestic companies listed on the same 

exchange. This proposal recognized that 

foreign private issuers are subject to 

different legal and regulatory 

requirements in their home 

jurisdictions, and as a result frequently 

follow different corporate governance 

practices from domestic companies. 

Many U.S. securities exchanges exempt 

listed foreign private issuers from many 

of their corporate governance 

requirements,133 but require these 

issuers to disclose the significant ways 

in which their corporate governance 

practices differ from those followed by 

domestic companies under the relevant 

exchange’s listing standards. Foreign 

private issuers may provide this 

disclosure either in their annual reports, 

and/or on their Web sites,134 and many 

foreign private issuers opt to provide 

this disclosure on their Web sites, rather 

than in their annual reports. 

We reiterate, as we stated when we 

proposed the amendments, that this 

disclosure does not imply a preference 

for any particular type of corporate 

governance regime. Again, we note that 

the disclosure should be useful to 

investors by facilitating their ability to 

monitor the issuer’s corporate 

governance practices. 

The vast majority of comments 

received on this proposal were 

supportive. Commenters noted that the 

proposed amendment would benefit 

investors by enabling them to access all 

of the corporate governance information 

about a foreign private issuer in one 

location. They also noted that the 

information would provide investors 

with relevant disclosure of any updates 

on a foreign private issuer’s corporate 

governance practices. 

After considering these comments, we 

are adopting amendments as proposed 

to require disclosure of this information 

in the Form 20–F annual reports filed by 

all foreign private issuers whose 

securities are listed on a U.S. exchange. 

New Item 16G would require foreign 

private issuers to provide a concise 

summary in their annual reports of the 

significant ways in which the foreign 

private issuer’s corporate governance 

practices differ from the corporate 

governance practices followed by 

domestic companies under the relevant 

exchange’s listing standards. 

Several commenters expressed the 

view that the new disclosure item 

should not require disclosure of more 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58313 

135See, e.g., the comment letters from the ABA, 

CAQ, Deloitte, and E&Y. 

136See comment letter from Cleary Gottlieb. 

137See, e.g., comment letter from the British 

Bankers’ Association. 

138See Section 303A.11 of the NYSE Listed 

Company Manual; Section 110 of the Amex 

Company Guide. 

139 17 CFR 210.11 et seq. 

140 Item 2.01 of Form 8–K requires domestic 

issuers to disclose certain information when they or 

one of their majority-owned subsidiaries complete 

an acquisition or disposition of a significant amount 

of assets, other than in the ordinary course of 

business. The Form 8–K filed to report this 

acquisition or disposition must be filed within four 

business days after the event has occurred. See 

General Instruction B.1. of Form 8–K. For a 

business acquisition significant at the 20% or 

greater level that must be disclosed pursuant to 

Item 2.01, Item 9.01 of Form 8–K requires the 

financial statements of the acquired business to be 

filed with the initial report of the acquisition on 

Form 8–K, or by amendment no later than 71 

calendar days after the date that the initial report 

on Form 8–K is due. 

141The significance of an acquired business is 

measured by the comparison of: (1) The registrant’s 

investment in the acquired business (acquisition 

price) to the registrant’s total assets, (2) the acquired 

business’ total assets to the total assets of the 

registrant, or (3) the acquired business’ pre-tax 

income to the pre-tax income of the registrant. See 

Rule 1–02(w) [17 CFR 210.1–02] of Regulation 

S–X. 

142 See comment letter from the New York City 

Bar. 

143 See comment letter from the ABA. 

144 44 U.S.C. 3501 et seq. 

145 44 U.S.C. 3507(d) and 5 CFR 1320.11. 

information than foreign issuers 

currently provide to the exchanges upon 

which their securities are listed.135

Another commenter proposed 

modifications to the proposed text of 

Item 16G out of concern that the 

proposed requirement would 

inadvertently result in long, boilerplate 

disclosures.136 Other commenters 

supported presentation of the 

information in a tabular format, while 

others expressed concern that requiring 

a particular type of presentation could 

encourage a ‘‘tick box’’ approach to 

corporate governance.137 In response to 

these comments, we have revised new 

Item 16G to more exactly track the 

analogous disclosure requirements of 

some of the exchanges,138 without 

specifying a particular format for the 

presentation of this information. We 

expect that the disclosure provided in 

response to new Item 16G will be 

similar, if not the same, as the 

disclosure that foreign private issuers 

currently provide in response to the 

corporate governance disclosure 

requirements of the exchange on which 

their securities are listed. Issuers should 

assess, and in the future re-assess, the 

format that they believe is most 

appropriate in their circumstances. 

III. Other Matters Considered 

At the time that we proposed the 

amendments discussed above, we also 

proposed to amend Item 17(a) of Form 

20–F to require foreign private issuers to 

provide, in certain circumstances, the 

financial information required by Rule 

3–05 and Article 11 139 of Regulation 

S–X. These rules pertain, respectively, 

to the financial statements that must be 

provided for significant, completed 

acquisitions and the preparation of pro 

forma financial statements. Although 

domestic companies must present the 

financial statements of significant 

acquired businesses and pro forma 

financial information in their 

registration statements under both the 

Securities Act and the Exchange Act, as 

well in a Form 8–K current report,140

foreign private issuers only provide this 

information in the registration 

statements that they file under the 

Securities Act and the Exchange Act. 

We proposed amendments to require 

foreign private issuers to provide the 

financial information elicited by Rule 

3–05 and Article 11 of Regulation S–X 

in their Exchange Act annual reports. 

Because foreign private issuers do not 

file current reports on Form 8–K, we did 

not propose imposing a requirement 

that this financial information be 

presented on a more current basis than 

annually. We proposed requiring foreign 

private issuers to provide financial 

information in their annual reports on 

Form 20–F about highly significant 

acquisitions completed during the most 

recent fiscal year covered by their 

annual report on that Form. As 

proposed, the disclosure requirement 

would have been triggered at the 50% 

or greater level of significance,141 and 

would have required the provision of 

financial statements for three fiscal 

years as prescribed by Rule 3– 

05(b)(2)(iv) of Regulation S–X. 

We received several comments on this 

proposal. Although many commenters 

supported the proposal, several also 

expressed concern about the timeliness 

of the information that would be 

provided, since it would be provided in 

the foreign private issuer’s periodic 

reports (i.e., its annual report), rather 

than on a current basis. Other 

commenters questioned the value of 

requiring foreign private issuers to 

provide historical financial statements 

of significant acquirees for three fiscal 

years. One commenter recommended 

that foreign private issuers be afforded 

the flexibility to include financial 

information based on the relevant IFRS 

and local auditing standards, and to 

omit financial information when it 

cannot be produced without 

unreasonable burden or expense.142

Another commenter suggested that we 

should defer to home country disclosure 

requirements, and require financial 

statements only with respect to the most 

recently completed fiscal year, unless 

home country law requires more.143

This commenter suggested that this 

approach would avoid the imposition of 

unnecessary burdens on foreign private 

issuers, as well as inconsistent 

disclosure obligations on the issuer, and 

would avoid creating a disparity in the 

information available to investors in the 

issuer’s home country and the United 

States. We are not adopting these 

amendments at this time, but will 

continue to consider the proposal in 

light of the concerns expressed. 

IV. Paperwork Reduction Act 

A. Background 

The final amendments contain 

‘‘collection of information’’ 

requirements within the meaning of the 

Paperwork Reduction Act of 1995 

(‘‘PRA’’).144 We have submitted the 

proposed amendments to the Office of 

Management and Budget (‘‘OMB’’) for 

review in accordance with the PRA.145

The titles for the affected collections of 

information are: 

(1) ‘‘Form 20–F’’ (OMB Control No. 

3235–0288); 

(2) ‘‘Form F–1’’ (OMB Control No. 

3235–0258); 

(3) ‘‘Form F–3’’ (OMB Control No. 

3235–0256); and 

(4) ‘‘Form F–4’’ (OMB Control No. 

3235–0325). 

Form 20–F sets forth the disclosure 

requirements for annual reports and 

registration statements filed by foreign 

private issuers under the Exchange Act, 

as well as many of the disclosure 

requirements for registration statements 

filed by foreign private issuers under the 

Securities Act. Forms F–1, F–3 and F– 

4 were adopted pursuant to the 

Securities Act, and set forth the 

disclosure requirements for registration 

statements filed by foreign private 

issuers to offer securities to the public. 

The hours and costs associated with 

preparing, filing and sending these 

forms and complying with these rules 

constitute reporting and cost burdens 

imposed by each collection of 

information. 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. 

The information collection requirements 

related to Forms 20–F, F–1, F–3 and F– 

4 are mandatory. There is no mandatory 

retention period for the information 

disclosed, and the information disclosed 

would be made publicly available on 

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58314 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

146 In connection with other recent rulemakings, 

we have had discussions with several law firms to 

estimate an hourly rate of $400 as the cost to 

companies for the services of outside professionals 

retained to assist in the preparation of these 

disclosures. For Securities Act registration 

statements, we also consider additional reviews of 

the disclosure by underwriter’s counsel and 

underwriters. 

the EDGAR filing system. We have 

based our estimates of the effect that the 

adopted rule and form amendments 

would have on those collections of 

information primarily on our review of 

the most recently completed PRA 

submissions for the affected rules and 

forms. 

The amendments will: (1) Amend 

Rule 405 of Regulation C under the 

Securities Act and Exchange Act Rule 

3b–4 to permit foreign issuers to test 

their qualification to use the forms and 

rules available to foreign private issuers 

on an annual basis, rather than on the 

continuous basis that is currently 

required; (2) Amend Form 20–F to 

accelerate the filing deadline for annual 

reports filed by foreign private issuers 

on Form 20–F, subject to a three-year 

transition period; and amend Exchange 

Act Rules 13a–10 and 15d–10, which 

pertains to transition reports filed by 

foreign private issuers on Form 20–F, 

and Exchange Act Rule 15d–2, which 

pertains to special financial reports filed 

by foreign private issuers, to conform 

the due dates for those reports with the 

due date for annual reports filed on 

Form 20–F; (3) Amend Form 20–F by 

eliminating an instruction to Item 17 of 

that Form, which permits certain foreign 

private issuers to omit segment data 

from their U.S. GAAP financial 

statements; (4) Amend Rule 13e–3, 

which pertains to going private 

transactions by reporting issuers or their 

affiliate, to reflect the recently adopted 

rules pertaining to the ability of foreign 

private issuers to terminate their 

Exchange Act registration and reporting 

obligations; (5) Amend Form 20–F and 

Forms F–1, F–3 and F–4 to require 

foreign private issuers that are required 

to provide a U.S. GAAP reconciliation 

to do so pursuant to Item 18 of Form 

20–F; (6) Amend Form 20–F, Forms F– 

1, F–3 and F–4 to require foreign private 

issuers to disclose information about a 

change in the issuer’s certifying 

accountant; and (7) Amend Form 20–F 

to require foreign private issuers to 

disclose the fees and charges paid by 

ADR holders, the payments made by the 

depositary to the foreign issuer whose 

securities underlie the ADRs, and for 

listed issuers, the differences in the 

foreign private issuer’s corporate 

governance practices and those 

applicable to domestic companies under 

the relevant exchange’s listing rules. 

We have based the annual burden and 

cost estimates of the adopted 

amendments on the following estimates 

and assumptions: 

• A foreign private issuer incurs or 

will incur 25% of the annual burden 

required to produce each Form 20–F, 

Form F–1, Form F–3, or Form F–4; and 

• Outside firms, including legal 

counsel, accountants and other advisors, 

incur or will incur 75% of the burden 

required to produce each Form 20–F, 

Form F–1, Form F–3, or Form F–4 at an 

average cost of $400 per hour.146

We estimated the average number of 

hours each entity spends completing the 

forms and the average hourly rate for 

outside professionals. That estimate 

includes the time and the cost of inhouse preparers, reviews by executive 

officers, in-house counsel, outside 

counsel, independent auditors and 

members of the audit committee. 

We published a notice requesting 

comment on the collection of 

information requirements in the 

Proposing Release and submitted these 

requirements to OMB for review in 

accordance with the PRA. Although we 

received many comment letters on the 

proposed rule amendments, none 

specifically addressed the estimated 

effects of these proposed amendments 

on the collection of information 

requirements. In response to the 

comments received, we have made 

certain modifications to the proposals. 

We have decided not to adopt the 

proposal to require disclosure of 

significant, completed acquisitions in 

the Form 20–F annual report, which 

will reduce our previous estimates of 

the reporting and cost burdens of 

preparing Form 20–F. As a result of 

comments received, we are also 

adopting a requirement that repeat 

registrants, rather than only first-time 

registrants, provide information about 

changes in and disagreements with their 

certifying accountant in their Securities 

Act registration statements. Because 

such an event occurs very rarely, this 

amendment will not significantly affect 

our estimate of the incremental 

reporting and cost burdens of this 

amendment. We are revising our 

estimates for Forms 20–F and Form F– 

3 accordingly. Other modifications that 

we have made to the proposed 

amendments do not affect our estimate 

of the incremental burden of the 

amendments because they will not 

change the amount of information 

required to be included by registrants in 

any of the affected Forms. These 

amendments include certain 

modifications to Rule 13e–3 to address 

technical concerns, a different 

accelerated due date for Form 20–F 

annual reports than proposed, and a 

longer transition period for certain 

amendments than originally proposed. 

B. Burden and Cost Estimates Related to 

the Amendments 

1. Form 20–F 

We estimate that currently foreign 

private issuers file 942 Form 20–Fs each 

year. We assume that 25% of the burden 

required to produce the Form 20–Fs is 

borne internally by foreign private 

issuers, resulting in 614,891 annual 

burden hours borne by foreign private 

issuers out of a total of 2,459,564 annual 

burden hours. Thus, we estimate that 

2,611 total burden hours per response 

are currently required to prepare the 

Form 20–F. We further assume that 75% 

of the burden to produce the Form 20– 

Fs is carried by outside professionals 

retained by foreign private issuers at an 

average cost of $400 per hour, for a total 

cost of $737,868,600. 

The amendment to amend Form 20– 

F to accelerate the filing deadline for 

annual reports and transitions reports 

filed on that Form will not change the 

amount of information required to be 

included in Exchange Act reports. In 

connection with this amendment, we 

are also adopting amendments to 

Exchange Act Rules 13a–10 and 15d–10, 

which pertain to transition reports filed 

on Form 20–F, and to Exchange Act 

Rule 15d–2, which pertains to special 

financial reports filed by foreign private 

issuers. Our amendments will conform 

the deadlines for transition reports filed 

on Form 20–F and for the special 

financial reports filed by foreign private 

issuers with the new deadline for 

annual reports filed on Form 20–F. 

These amendments also will not change 

the amount of information required to 

be included in Exchange Act reports. 

Therefore, these amendments will 

neither increase nor decrease the 

amount of burden hours necessary to 

prepare annual reports on Form 20–F 

for the purposes of the PRA. 

With respect to our amendment to 

require foreign private issuers that are 

required to provide a U.S. GAAP 

reconciliation to do so pursuant to Item 

18 of Form 20–F, we estimate that 

approximately 200 companies that file 

Form 20–F will be impacted by the 

amendment. We expect that the 

amendment will cause those foreign 

private issuers to have more burden 

hours. We estimate that for each of the 

companies affected by the amendment, 

there will occur an increase of 2% 

(52.22 hours) in the number of burden 

hours required to prepare their Form 

20–F, for a total increase of 10,444 hours 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58315 

as a result of this amendment. We 

expect that 25% of those increased 

burden hours (2,611 hours) will be 

incurred by foreign private issuers. We 

further expect that 75% of these 

increased burden hours (7,833 hours) 

will be incurred by outside firms, at an 

average cost of $400 per hour, for a total 

of $3,133,200 in increased costs to the 

respondents of the information 

collection as a result of this amendment. 

With respect to our amendment to 

require disclosure about a change in the 

issuer’s certifying accountant in annual 

reports and registration statements filed 

on Form 20–F, we estimate that 

approximately 90 companies that file 

Form 20–F will be impacted by the 

amendment. The amendment will cause 

those foreign private issuers to have 

more burden hours. We estimate that for 

each of the companies affected by the 

amendment, there will occur an 

increase of .75% (19.58 hours) in the 

number of burden hours required to 

prepare their Form 20–F, for a total 

increase of 1,762.2 hours. We expect 

that 25% of those increased burden 

hours (440.55 hours) will be incurred by 

foreign private issuers. We further 

expect that 75% of these increased 

burden hours (1,321.65 hours) will be 

incurred by outside firms, at an average 

cost of $400 per hour, for a total of 

$528,660 in increased costs to the 

respondents of the information 

collection as a result of the amendment. 

Our amendment to require disclosure 

about ADR fees and payments on an 

annual basis, we estimate that 

approximately 442 companies that file 

Form 20–F will be impacted by the 

amendment. The amendment will cause 

those foreign private issuers to have 

more burden hours. We estimate that for 

each of the companies affected by the 

amendment, there will occur an 

increase of .25% (6.53 hours) in the 

number of burden hours required to 

prepare their Form 20–F, for a total 

increase of 2,886.26 hours. We expect 

that 25% of those increased burden 

hours (721.57 hours) will be incurred by 

foreign private issuers. We further 

expect that 75% of these increased 

burden hours (2,164.71 hours) will be 

incurred by outside firms, at an average 

cost of $400 per hour, for a total of 

$865,884 in increased costs to the 

respondents of the information 

collection as a result of the amendment. 

With respect to our amendment to 

require annual disclosure about 

differences in a listed foreign private 

issuer’s corporate practices and those 

applicable to domestic companies under 

the relevant exchange’s listing rule, we 

estimate that approximately 783 

companies that file Form 20–F will be 

impacted by the amendment. The 

amendment will not cause a significant 

change in the burden hours for those 

foreign private issuers because they 

already prepare this information for the 

exchanges on which they are listed. 

Our amendment to eliminate an 

instruction to Item 17 of Form 20–F, 

which permits certain foreign private 

issuers to omit segment data from their 

U.S. GAAP financial statements, we 

estimate that approximately 5 

companies that file Form 20–F will be 

currently impacted by the amendment. 

The amendment will cause those foreign 

private issuers to have more burden 

hours. We estimate that for each of the 

companies affected by the amendment, 

there will occur an increase of 2% 

(52.22 hours) in the number of burden 

hours required to prepare their Form 

20–F, for a total increase of 261.1 hours. 

We expect that 25% of those increased 

burden hours (65.3 hours) will be 

incurred by foreign private issuers. We 

further expect that 75% of these 

increased burden hours (195.83 hours) 

will be incurred by outside firms, at an 

average cost of $400 per hour, for a total 

of $78,332 in increased costs to the 

respondents of the information 

collection as a result of the amendment. 

Because we have decided not to adopt 

the proposal to amend Form 20–F to 

require foreign private issuers to 

provide certain financial information in 

their annual reports on that Form about 

a significant, completed acquisition that 

is significant at the 50% or greater level, 

we have reduced the estimated burdens 

and costs associated with preparing 

Form 20–F. 

Thus, we estimate that the 

amendments to Form 20–F will increase 

the annual burden borne by foreign 

private issuers in the preparation of 

Form 20–F from 614,891 hours to 

618,729.5 hours. We further estimate 

that the amendments will increase the 

total annual burden associated with 

Form 20–F preparation to 2,474,918 

burden hours, which will increase the 

average number of burden hours per 

response to 2627. We further estimate 

that the amendments will increase the 

total annual costs attributed to the 

preparation of Form 20–F by outside 

firms to $742,475,400. 

2. Form F–1 

We estimate that currently foreign 

private issuers file 42 registration 

statements on Form F–1 each year. We 

assume that 25% of the burden required 

to produce a Form F–1 is borne by 

foreign private issuers, resulting in 

18,890 annual burden hours incurred by 

foreign private issuers out of a total of 

75,560 annual burden hours. Thus, we 

estimate that 1,799 total burden hours 

per response are currently required to 

prepare a registration statement on Form 

F–1. We further assume that 75% of the 

burden to produce a Form F–1 is carried 

by outside professionals retained by 

foreign private issuers at an average cost 

of $400 per hour, for a total cost of 

$22,667,400. 

We estimate that currently 

approximately 4 companies that file 

registration statements on Form F–1 will 

be impacted by the amendment to 

require foreign private issuers to 

provide disclosure about a change in 

their certifying accountant in their 

initial registration statements. The 

amendment will cause those foreign 

private issuers to have more burden 

hours. We estimate that each company 

affected by the amendment will have a 

.75% increase (13.49 hours) in the 

number of burden hours required to 

prepare their registration statements on 

Form F–1, for a total increase of 54 

hours. We expect that 25% of these 

increased burden hours (13.5 hours) 

will be incurred by foreign private 

issuers. We further expect that 75% of 

the increased burden hours (40.5 hours) 

will be incurred by outside firms, at an 

average cost of $400 per hour, for a total 

of $16,200 in increased costs to the 

respondents of the information 

collection as a result of the amendment. 

We estimate that none of the 

companies that file registration 

statements on Form F–1 will be 

impacted by the amendment to require 

foreign private issuers that are required 

to provide a U.S. GAAP reconciliation 

to do so pursuant to Item 18 of Form 

20–F. In our experience, the companies 

that use Form F–1 are engaging in 

capital raising transactions, so that all 

registrants have been providing 

financial information according to Item 

18. The amendment will be a technical 

change to the Form without any 

expected impact on the companies 

using that Form for collection of 

information purposes. 

Thus, we estimate that the 

amendments to Form F–1 will increase 

the annual burden incurred by foreign 

private issuers in the preparation of 

Form F–1 from 18,890 hours to 18,904 

hours. We further estimate that the 

amendments will increase the total 

annual burden associated with Form F– 

1 preparation to 75,614 burden hours, 

which will increase the average number 

of burden hours per response to 1800. 

We further estimate that the 

amendments will increase the total 

annual costs attributed to the 

preparation of Form F–1 by outside 

firms to $22,683,600. 

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3. Form F–3 

We estimate that currently foreign 

private issuers file 106 registration 

statements on Form F–3 each year. We 

assume that 25% of the burden required 

to produce a Form F–3 is borne by 

foreign private issuers, resulting in 

4,399 annual burden hours incurred by 

foreign private issuers out of a total of 

17,596 annual burden hours. Thus, we 

estimate that 166 total burden hours per 

response are currently required to 

prepare a registration statement on Form 

F–3. We further assume that 75% of the 

burden to produce a Form F–3 is carried 

by outside professionals retained by 

foreign private issuers at an average cost 

of $400 per hour, for a total cost of 

$5,278,800. 

We estimate that currently 

approximately 20 companies that file 

registration statements on Form F–3 will 

be impacted by the amendment to 

require foreign private issuers that are 

required to provide a U.S. GAAP 

reconciliation to do so pursuant to Item 

18 of Form 20–F. The amendment will 

cause those foreign private issuers to 

have more burden hours. We estimate 

that each company affected by the 

amendment will have a 2% increase 

(3.32 hours) in the number of burden 

hours required to prepare their 

registration statements on Form F–3, for 

a total increase of 66.4 hours. We expect 

that 25% of these increased burden 

hours (16.6 hours) will be incurred by 

foreign private issuers. We further 

expect that 75% of the increased burden 

hours (49.8 hours) will be incurred by 

outside firms, at an average cost of $400 

per hour, for a total of $19,920 in 

increased costs to the respondents of the 

information collection as a result of the 

amendment. 

In response to comments received, we 

have amended F–3 to require foreign 

private issuers that are repeat registrants 

to disclose a change in or disagreement 

with their certifying accountant in their 

registration statements filed on Form 

F–3. As proposed, this amendment 

would have applied only to registration 

statements used in initial public 

offerings, and would not have been 

reflected in our collection of 

information estimates for Form F–3, 

since Form F–3 is not available for 

initial public offerings. We estimate that 

currently approximately 10 companies 

that file registration statements on Form 

F–3 will be impacted by this 

amendment. The amendment will cause 

those foreign private issuers to have 

more burden hours. We estimate that 

each company affected by the 

amendment will have a .75% increase 

(1.245 hours) in the number of burden 

hours required to prepare their 

registration statements on Form F–3, for 

a total increase of 12.45 hours. We 

expect that 25% of these increased 

burden hours (3.11 hours) will be 

incurred by foreign private issuers. We 

further expect that 75% of the increased 

burden hours (9.34 hours) will be 

incurred by outside firms, at an average 

cost of $400 per hour, for a total of 

$3,736 in increased costs to the 

respondents of the information 

collection as a result of the amendment. 

Thus, we estimate that the 

amendments to Form F–3 will increase 

the annual burden incurred by foreign 

private issuers in the preparation of 

Form F–3 from 4,399 hours to 4,418.71 

hours. We further estimate that the 

amendments will increase the total 

annual burden associated with Form F– 

3 preparation to 17,674.85 burden 

hours, which will increase the average 

number of burden hours per response to 

167. We further estimate that the 

amendments will increase the total 

annual costs attributed to the 

preparation of Form F–3 by outside 

firms to $5,302,455. 

4. Form F–4 

We estimate that currently foreign 

private issuers file 68 registration 

statements on Form F–4 each year. We 

assume that 25% of the burden required 

to produce a Form F–4 is borne 

internally by foreign private issuers, 

resulting in 24,497 annual burden hours 

incurred by foreign private issuers out 

of a total of 97,988 annual burden hours. 

Thus, we estimate that 1,441 total 

burden hours per response are currently 

required to prepare a registration 

statement on Form F–4. We further 

assume that 75% of the burden to 

produce a Form F–4 is carried by 

outside professionals retained by foreign 

private issuers at an average cost of $400 

per hour, for a total cost of $29,396,400. 

We estimate that currently 

approximately none of the companies 

that file registration statements on Form 

F–4 will be impacted by the amendment 

to require foreign private issuers that are 

required to provide a U.S. GAAP 

reconciliation to do so pursuant to Item 

18 of Form 20–F. In our experience, the 

companies that use Form F–4 have all 

been providing financial information 

according to Item 18 because of the 

types of transactions that are registered 

on that Form, so the amendment will be 

a technical change to the Form without 

any expected impact on the companies 

using it. 

We estimate that currently 

approximately 5 companies that file 

registration statements on Form F–4 will 

be impacted by the amendment to 

require foreign private issuers to 

provide disclosure about a change in 

their certifying accountant in their 

initial registration statements. The 

amendment will cause those foreign 

private issuers to have more burden 

hours. We estimate that each company 

affected by the amendment will have a 

.75% increase (10.81 hours) in the 

number of burden hours required to 

prepare their registration statements on 

Form F–1, for a total increase of 54 

hours. We expect that 25% of these 

increased burden hours (13.5 hours) 

will be incurred by foreign private 

issuers. We further expect that 75% of 

the increased burden hours (40.5 hours) 

will be incurred by outside firms, at an 

average cost of $400 per hour, for a total 

of $16,200 in increased costs to the 

respondents of the information 

collection as a result of the amendment. 

Thus, we estimate that the 

amendments to Form F–4 will increase 

the annual burden incurred by foreign 

private issuers in the preparation of 

Form F–4 from 24,497 hours to 24,511 

hours. We further estimate that the 

amendments will increase the total 

annual burden associated with Form F– 

4 preparation to 98,042 burden hours, 

which will decrease the average number 

of burden hours per response to 1,442. 

We further estimate that the 

amendments will increase the total 

annual costs attributed to the 

preparation of Form F–4 by outside 

firms to $29,412,600. 

5. Other Amendments 

The amendments to Securities Act 

Rule 405 and Exchange Act Rule 3b–4 

will revise the definition of ‘‘foreign 

private issuer’’ to permit foreign issuers 

to test their status as ‘‘foreign private 

issuers’’ on the last business day of their 

second fiscal quarter, rather than 

continuously, as is currently the case. 

Our amendments will not change the 

amount of information required to be 

included in Securities Act registration 

statements or Exchange Act reports. 

Therefore, they will neither increase nor 

decrease the amount of burden hours 

necessary to prepare documents under 

either of those Acts for the purposes of 

the PRA. 

In addition, we do not expect a 

change in the number of foreign private 

issuers who will be required to comply 

with Rule 13e–3, or the burden hours 

required to prepare a Schedule 13E–3. 

With respect to domestic issuers, 

although we do not expect the number 

of domestic issuers affected by the 

amendments to Rule 13e–3 to decrease, 

we also expect that the Rule 

amendments will have a negligible 

effect on these issuers because the 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58317 

smaller reporting companies that will be 

affected by the amendments could 

voluntarily deregister and thus avoid 

any requirement to comply with that 

Rule. 

V. Cost-Benefit Analysis 

We are adopting amendments to our 

rules and forms relating to foreign 

private issuers that are intended to 

enhance the information that is 

available to investors, promote investor 

protection and facilitate cross-border 

capital flows. 

A. Annual Test for Foreign Private 

Issuer Status 

1. Expected Benefits 

The amendments to the definition of 

‘‘foreign private issuer’’ contained in 

Securities Act Rule 405 and Exchange 

Act Rule 3b–4 will permit reporting 

foreign issuers to assess their eligibility 

to use the special forms and rules 

available to foreign private issuers once 

a year on the last business day of their 

second fiscal quarter, rather than 

continuously, as is currently the case. 

This is the same date used to determine 

accelerated filer status under Exchange 

Act Rule 12b–2 and smaller reporting 

company status in Item 10(f)(2)(i) of 

Regulation S–K. As a result, these 

adopted amendments should simplify 

compliance with the Commission’s 

regulations by establishing one date that 

is used to ascertain an issuer’s status. 

Foreign issuers should benefit as a 

result of this simplification of their 

compliance requirements, which could 

make the U.S. markets more attractive to 

them as a source of capital and thereby 

enhance the competitiveness of the U.S. 

markets compared to other markets. The 

amendments are expected to reduce the 

cost for foreign issuers of monitoring 

whether they qualify as foreign private 

issuers, including the time spent by 

management in tracking this 

information. If more foreign issuers are 

encouraged to remain in the U.S. 

markets and to make public offerings, 

investors should also benefit because 

this will enhance their ability to invest 

in the securities of foreign issuers that 

have been registered with the 

Commission, and that are thus subject to 

the disclosure requirements and 

investor protections provided by the 

federal securities laws. 

Once a foreign issuer determines that 

it no longer qualifies as a foreign private 

issuer, the amendments will provide the 

issuer with at least six months’ advance 

notice that it must comply with the 

domestic issuer forms and rules. This 

will provide these issuers with more 

time to comply with the reporting 

requirements applicable to domestic 

issuers under the Exchange Act, and to 

modify their information and processing 

systems to comply with the domestic 

reporting and registration regime. This 

includes the requirements to comply 

with the more extensive executive 

compensation disclosure requirements 

that apply to domestic issuers, as well 

as the proxy rules and Section 16 

reporting requirements under the 

Exchange Act, which do not apply to 

foreign private issuers. Because the 

amendments will provide foreign 

issuers with advance notice when their 

status changes, more foreign issuers may 

be encouraged to remain in the U.S. 

markets, and investors should benefit 

from the increased opportunities to 

invest in foreign securities in the United 

States. 

The amendments should mitigate a 

burden on foreign issuers by reducing 

the amount of time and the resources 

they expend to determine their status 

pursuant to the four-factor test set forth 

in the definition of ‘‘foreign private 

issuer.’’ In this respect, the amendments 

will be most beneficial to reporting 

foreign private issuers that have close to 

50% of their outstanding voting 

securities held of record by U.S. 

residents, since they are most at risk of 

no longer qualifying as foreign private 

issuers. The current requirement that 

foreign issuers continuously test their 

status can result in confusion for 

investors if a foreign issuer needs to 

move between foreign and domestic 

reporting forms in the same fiscal year. 

For example, investors may be confused 

if a foreign issuer determines that it no 

longer qualifies as a foreign private 

issuer, and then switches from the 

foreign private issuer forms (Form 6–K 

and Form 20–F) to the domestic forms 

(e.g., quarterly reports on Form 10–Q) in 

the same fiscal year. In the case of a 

foreign issuer that loses its foreign 

private issuer status, the amendments 

will benefit U.S. investors by 

eliminating the confusion that could 

result if the foreign issuer switched 

forms in the middle of the year. 

However, the amendments may not be 

as helpful in reducing investor 

confusion with respect to foreign private 

issuers that have been reporting under 

the domestic regime and that will now 

be permitted to switch immediately to 

the foreign private issuer reporting 

regime upon the determination of their 

eligibility to do so. 

At the same time, foreign issuers that 

previously did not qualify as foreign 

private issuers, but that determine that 

they will qualify as foreign private 

issuers, will be able to use the foreign 

private issuer rules and forms 

immediately under the amendments. 

This accommodation could encourage 

more foreign issuers to enter the U.S 

markets and to make public offerings, 

and should benefit investors by 

enhancing their ability to invest in 

foreign securities that have been 

registered with the Commission. 

2. Expected Costs 

Investors could incur costs from the 

amendments if foreign issuers that have 

been reporting under the domestic 

reporting regime immediately switch 

over to the foreign private issuer forms 

once they qualify as foreign private 

issuers. Because foreign private issuers 

have different Exchange Act reporting 

obligations than domestic issuers and 

file on different forms, some investors 

may find it confusing if a foreign issuer 

that had been reporting under the 

domestic reporting regime switches 

reporting regimes mid-year. In addition, 

once a foreign issuer switches status 

from a domestic issuer to a foreign 

private issuer, investors will no longer 

have the benefit of the disclosures that 

were once provided by the foreign 

issuer on the domestic forms. 

Currently, when a foreign issuer no 

longer qualifies as a foreign private 

issuer, it must immediately file 

quarterly reports on Form 10–Q and 

current reports on Form 8–K. It must 

also comply with the Commission’s 

proxy rules and the Section 16 insider 

stock trading and short-swing profit 

recovery provisions. Under the 

amendments, when a foreign issuer 

determines that it no longer qualifies as 

a foreign issuer, for the six months 

following the test date, the foreign 

issuer will be permitted to continue 

relying on the rules applicable to foreign 

private issuers, such as the exemption 

from the proxy rules and Section 16. 

The foreign issuer will also be allowed 

to use the forms reserved for foreign 

private issuers, and to provide current 

reports on Form 6–K, rather than 

Exchange Act reports on Forms 10–Q 

and 8–K. During that period, investors 

will not have the benefit of the 

additional disclosures that the foreign 

issuer would otherwise be required to 

provide. 

B. Amendments to Form 20–F 

The amendments will make several 

changes to annual reports filed on Form 

20–F. We are adopting amendments to 

accelerate the deadline for annual 

reports filed on Form 20–F by foreign 

private issuers. We are also adopting 

amendments to Form 20–F to require 

certain additional disclosures in annual 

reports on that Form. The adopted 

amendments will require issuers to 

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58318 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

147 In Form 20–F, this disclosure item is 

contained in Item 5 (Operating and Financial 

Review and Prospects). 

disclose any changes in and 

disagreements with the registrant’s 

certifying accountant in their Form 20– 

F annual reports, as well as in the 

Securities Act registration statements 

filed by registrants with the 

Commission. The amendments will also 

require disclosure of the fees and other 

charges paid by ADR holders to 

depositaries, and any payments made by 

depositaries to the foreign issuers whose 

securities underlie the ADRs. In 

addition, we are adopting amendments 

to Form 20–F to require disclosure in 

the annual report about the significant 

differences in the corporate governance 

practices of listed foreign private issuers 

compared to the corporate governance 

practices applicable to domestic 

companies under the relevant 

exchange’s listing standards. Another 

adopted amendment will eliminate an 

instruction to Item 17 of Form 20–F that 

permits certain foreign private issuers to 

omit segment data from the U.S. GAAP 

financial statements. 

In addition to these amendments, we 

are adopting amendments to eliminate 

the availability of the limited U.S. 

GAAP reconciliation option that is 

contained in Item 17 of Form 20–F for 

foreign private issuers that are only 

listing a class of securities on a U.S. 

national securities exchange, or only 

registering a class of equity securities 

under Section 12(g) of the Exchange 

Act, and not conducting a public 

offering. The amendments will apply 

not only to registration statements filed 

on Form 20–F in the circumstances 

described above, but also to annual 

reports filed on that Form. Related to 

this adopted amendment, we are 

adopting amendments to eliminate the 

Item 17 limited reconciliation option for 

certain non-capital raising offerings, 

such as offerings pursuant to dividend 

reinvestment plans, offerings upon the 

conversion of securities, or offerings of 

investment grade securities. The 

Securities Act registration statement 

forms available to foreign private issuers 

(Form F–1, F–3 and F–4) are amended 

accordingly. 

1. Expected Benefits 

We anticipate that the adopted 

amendments to Form 20–F and the 

related amendments to the Securities 

Act registration statement forms 

available to foreign private issuers will 

provide a significant benefit to U.S. 

investors by providing them with 

enhanced disclosure that is more similar 

to the disclosures provided by domestic 

issuers, as well as disclosure on an 

accelerated basis that is more 

comparable to the timeframe within 

which domestic issuers file annual 

reports. Because of the Commission’s 

integrated disclosure system, in which 

approximately the same information is 

provided in both the primary and 

secondary markets, the disclosure 

requirements contained in Form 20–F 

are often more comprehensive than the 

disclosures required by foreign 

securities regulators. For example, 

although many foreign regulators 

require audited financial statements and 

a form of management’s report in annual 

reports, they do not require disclosure 

about executive compensation, 

description about the issuer’s business, 

or a Management’s Discussion and 

Analysis.147 These additional 

disclosures are required in the Form 20– 

F annual reports that foreign private 

issuers file with the Commission. 

Based on a sample of Form 20–F 

annual reports filed with the 

Commission in the past few years, we 

estimate that approximately one-third of 

all such filers currently file Form 20–F 

annual reports with us within 120 days 

after their fiscal year-end. The adopted 

amendment to accelerate the due date 

for Form 20–F annual reports will thus 

affect a majority of the foreign private 

issuers that file on Form 20–F. As a 

result of the accelerated deadline, 

investors may be better able to compare 

the performance of foreign and domestic 

issuers, since information about both 

will be provided on a more 

contemporaneous basis. 

The adopted amendments to require 

additional disclosure in Form 20–F 

annual reports should help investors 

better compare foreign and domestic 

issuers. Currently, domestic issuers 

provide disclosure about changes in and 

disagreements with their certifying 

accountant on a Form 8–K current 

report. Listed domestic issuers are also 

required to comply with the corporate 

governance requirements of the U.S. 

exchange on which their securities are 

listed, although foreign private issuers 

whose securities are listed on the same 

exchange are exempt. The adopted 

amendments will provide investors with 

more comparable information about 

foreign private issuers regarding 

possible audit opinion shopping and 

corporate governance practices. 

The adopted amendments to require 

disclosure about ADR fees and 

payments made by depositaries to the 

foreign issuers whose securities 

underlie the ADRs will make this 

information more readily available to 

investors. The placement of this 

disclosure in annual reports and Form 

20–F registration statements should 

assist investors in determining the fees 

related to their investments in ADRs, 

including indirect costs that may be 

imposed on them if the depositary bank 

passes along the cost of its payments to 

foreign issuers to ADR holders. This 

should better enable investors to 

determine whether to invest in the 

ADRs of foreign issuers. 

Several of the adopted amendments to 

Item 17 of Form 20–F may also help 

ensure that all foreign private issuers 

provide the same level of financial 

information, thereby facilitating a 

readier comparison across all issuers. 

This could, as a consequence, increase 

the attractiveness of these companies to 

investors. For example, the adopted 

amendments will eliminate the 

availability of the limited U.S. GAAP 

reconciliation option in Item 17 of Form 

20–F for annual reports, registration 

statements on Form 20–F that do not 

involve a public offering, and Securities 

Act registration statements for certain 

non-capital raising transactions. 

Currently, most foreign private issuers 

that provide U.S. GAAP reconciliation 

disclose financial information according 

to Item 18 of Form 20–F. The adopted 

amendment will require that all foreign 

private issuers provide this level of 

disclosure. Another adopted 

amendment will eliminate the 

instruction to Item 17 of Form 20–F that 

permits certain foreign private issuers to 

omit segment data from their U.S. GAAP 

financial statements. Although we 

estimate that less than 10 foreign private 

issuers use this instruction, the 

instruction creates an anomaly whereby 

an issuer is permitted to provide a 

qualified U.S. GAAP audit report. 

2. Expected Costs 

Foreign private issuers could incur 

costs from the adopted amendments to 

Form 20–F, and the related amendments 

to the Securities Act registration 

statements available to foreign private 

issuers. In order to comply with the 

adopted accelerated due dates, many 

foreign private issuers will likely have 

to implement new systems for preparing 

information during the transition period 

to the new rules. They could be required 

to prepare annual reports on a dual 

track, one for the annual report filed 

with their home country regulator and 

the Form 20–F annual report. According 

to a sample of Form 20–F annual reports 

filed with us, approximately one-third 

of all such filers file their Form 20–F 

annual reports within 120 days of their 

fiscal year-end. The cost of preparing 

filings on an accelerated basis may 

therefore vary among issuers. In 

addition, because of the Commission’s 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58319 

integrated disclosure system, in which 

issuers provide approximately the same 

disclosures to both the primary and 

secondary markets, the disclosures 

required in Form 20–F are more 

substantial than the information 

required for annual reports in many 

foreign jurisdictions. The amendments 

could thus result in increased costs for 

foreign private issuers. 

The amendments to provide 

additional disclosures in Form 20–F 

may also impose additional costs on 

foreign private issuers. With respect to 

the adopted disclosure regarding ADR 

fees and payments made by 

depositaries, we note that the 

information about ADR fees is provided 

in the deposit agreement and form of 

receipt that are attached as exhibits to 

the Form F–6 used to register the ADRs 

under the Securities Act, as well as in 

the Securities Act registration statement 

related to the offering of the securities 

underlying the ADRs. Because the 

information is already required by the 

Commission, albeit in filings that most 

retail investors are not familiar with, we 

do not believe that the requirement to 

include this information in the foreign 

private issuer’s annual report on Form 

20–F will involve significant 

compliance costs. 

In addition, the information about the 

payments made by depositaries to 

foreign private issuers will provide 

important new information to investors 

about incentives used by depositaries 

that may encourage foreign private 

issuers to sell their securities in ADR 

form and with a particular depositary 

bank. If foreign issuers are reluctant to 

disclose this information, they could be 

discouraged from entering the U.S. 

markets, or, if they already have 

established ADR facilities in the United 

States, from maintaining their ADR 

facilities. This could reduce the 

opportunities for investors to invest in 

foreign securities in the United States. 

Foreign private issuers could incur 

some costs related to the proposal to 

include information about differences in 

corporate governance practices for listed 

foreign private issuers. However, the 

U.S. exchanges already require that this 

information be prepared. For foreign 

private issuers that are listed on U.S. 

exchanges, the amendment will not 

involve the collection of new 

information or preparation of new 

disclosure, but will simply require that 

the information also be made available 

in the annual report, where many 

investors may expect to see it. As a 

result, we believe the compliance costs 

of this amendment will be relatively 

small. Corporate governance 

information elicited by the amendment 

will not be required for issuers that are 

not listed on a U.S. exchange. 

The amendments to eliminate the 

availability of the limited U.S. GAAP 

reconciliation contained in Item 17 of 

Form 20–F could result in costs for the 

affected foreign private issuers because 

they will now need to collect this 

information and to prepare additional 

disclosure in their Form 20–F annual 

reports. Some commenters expressed 

concern about the potential compliance 

burdens associated with the amendment 

to eliminate the availability of the Item 

17 reconciliation, especially because 

they believe that other countries are 

gradually requiring footnote disclosures 

comparable in scope to U.S. GAAP and 

Regulation S–X. However, based on our 

review of Form 20–F annual report 

filings made with us for fiscal year 2006, 

we estimate that most foreign private 

issuers already provide financial 

information according to Item 18 of 

Form 20–F. In addition, we believe that 

a reconciliation that includes the 

footnote disclosures required by U.S. 

GAAP and Regulation S–X can provide 

important additional information to 

investors. Some commenters also noted 

that foreign private issuers that provide 

the Item 17 reconciliation in their 

annual reports tend to be smaller 

companies, and that these companies 

would face significant burdens on their 

financial accounting and reporting 

system if they are required to provide 

the additional Item 18 disclosures and 

also comply with the accelerated due 

date for filing Form 20–F annual reports 

at the same time. To reduce the 

potential burdens on these issuers, we 

are providing a three-year transaction 

period before the amendment takes 

effect, which will align the compliance 

date for the adopted amendments with 

the date on which many countries will 

be adopting IFRS. 

The amendment to require segment 

data in U.S. GAAP financial statements 

could also result in costs for the affected 

foreign private issuers because of the 

need to collect this information and to 

prepare additional disclosure in their 

Form 20–F annual reports. However, we 

note that approximately five foreign 

private issuers will be affected by the 

requirement to provide segment data. 

Foreign private issuers will also incur 

costs in connection with the 

amendment to require disclosure about 

any changes in and disagreements with 

the registrant’s certifying accountant in 

Form 20–F annual reports and in 

Securities Act registration statements 

filed by registrants. In addition to the 

preparation costs of including this 

information in the Form 20–F, the 

foreign private issuer could also incur 

certain costs associated with the 

requirement to obtain a letter from its 

former accountant stating whether it 

agrees with the disclosure provided by 

the issuer in the document filed with 

the Commission. 

Investors may incur costs to the extent 

that the amendments to Form 20–F 

discourage foreign private issuers from 

registering or maintaining their 

registration with the Commission. If 

foreign private issuers deregister or do 

not register their securities under the 

Securities Act or the Exchange Act, 

there may be reduced opportunities for 

investment by U.S. investors in the 

securities of foreign issuers. Although 

each of the adopted amendments will 

affect a different number of foreign 

private issuers, for purposes of the 

Paperwork Reduction Act, we estimate 

that these new disclosures will result in 

an increased paperwork burden of 25 

hours for all respondents and 

$4,606,800 for Form 20–F. 

C. Exchange Act Rule 13e–3 

1. Expected Benefits 

We believe that the amendment to 

Exchange Act Rule 13e–3, which 

pertains to going private transactions by 

reporting issuers or their affiliates, to 

reflect the recently adopted rules 

pertaining to the ability of foreign 

private issuers to terminate their 

Exchange Act registration and reporting 

obligations will benefit investors. By 

amending this Rule, the test for 

determining when a domestic issuer 

undertakes a going private transaction 

will also change. The amendment will 

help ensure that Rule 13e–3 covered the 

types of transactions that were intended 

when the Commission first adopted the 

Rule. Investors will benefit because 

more foreign private issuers are 

expected to be able to terminate their 

registration and reporting obligations 

under the Exchange Act as a result of 

these recently adopted amendments. If 

more foreign private issuers decide to 

conduct going private transactions to 

terminate their registration or reporting 

obligations, the amendment to Rule 

13e–3 will require more foreign private 

issuers to comply with that Rule and to 

file a Schedule 13E–3, as required by 

that Rule. Similarly, modernizing Rule 

13e–3 to apply equally to domestic 

issuers when a transaction identified in 

the Rule results in the issuer becoming 

eligible to terminate or suspend its 

reporting obligations is consistent with 

the policy purpose supporting the 

Rule’s initial adoption. Investors will 

benefit from the additional disclosures 

that will be provided. 

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58320 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

148 15 U.S.C. 77b(b). 

149 15 U.S.C. 78c(f). 

150 15 U.S.C. 78w(a)(2). 151 5 U.S.C. 605(b). 

2. Expected Costs 

Foreign private issuers and domestic 

issuers may incur additional costs in 

connection with the adopted 

amendment to Rule 13e–3(a)(3)(ii)(A) if 

Rule 13e–3 is more easily triggered 

because of the reference to the new 

termination of registration and reporting 

requirements that apply to foreign 

private issuers. These costs will include, 

for example, the cost of preparing, filing 

and disseminating a Schedule 13E–3, as 

well as any required amendments to 

that Schedule, with the Commission. 

VI. Consideration of Impact on the 

Economy, Burden on Competition, and 

Promotion of Efficiency, Competition, 

and Capital Formation 

When engaging in rulemaking that 

requires us to consider or determine 

whether an action is necessary or 

appropriate in the public interest, 

Section 2(b) of the Securities Act 148 and 

Section 3(f) of the Exchange Act 149

require us to consider whether the 

action will promote efficiency, 

competition and capital formation. 

When adopting rules under the 

Exchange Act, Section 23(a)(2) of the 

Exchange Act 150 requires us to consider 

the impact that any new rule will have 

on competition. In addition, Section 

23(a)(2) prohibits us from adopting any 

rule that will impose a burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. 

In the Proposing Release, we 

considered the proposed amendments 

in light of the standards set forth in the 

above referenced statutory sections. We 

solicited comment on whether, if 

adopted, the proposed rule amendments 

would result in any anti-competitive 

effect or would promote efficiency, 

competition and capital formation. In 

addition, we encouraged commenters to 

provide empirical data or other facts to 

support their views on any anticompetitive effects or any burdens on 

efficiency, competition or capital 

formation that may result from adoption 

of the proposed amendments. 

We did not receive any empirical data 

in this regard concerning the proposed 

amendments. However, with respect to 

our amendment to require more 

disclosure about payments made by 

depositaries in connection with ADR 

facilities, one commenter suggested that 

disclosure of the aggregate amount of 

incentive payments made by 

depositaries to foreign private issuers 

whose securities underlie the ADRs, 

rather than disclosure about each 

payment, would avoid undermining 

competition among depositaries. We 

believe that information about the types 

of payments made by depositaries to 

issuers would be useful to investors 

because it would enable them to 

understand the purpose of the 

payments, and that the disclosure of 

that information on an aggregate basis 

would undercut the value of the 

disclosure. Accordingly, we continue to 

believe the new rules will contribute to 

efficiency, competition and capital 

formation. 

The purpose of the amendments to 

Securities Act Rule 405 and Exchange 

Act Rule 3b–4, which will permit 

foreign issuers to assess their eligibility 

to use the special forms and rules 

available to foreign private issuers once 

a year, are expected to facilitate capital 

formation by foreign issuers in the U.S. 

capital markets. The adopted 

amendments should reduce regulatory 

compliance burdens for foreign private 

issuers that rely on the adopted 

amendments because of the reduction in 

monitoring costs. Reduced compliance 

burdens are expected to lower the cost 

of raising capital in the Unites States for 

those issuers. In addition, the 

competitiveness of the U.S. markets may 

be enhanced because the reduced 

monitoring costs may make the markets 

more attractive to them. The reduction 

in compliance burdens may also 

promote efficiency because foreign 

issuers will no longer need to 

continuously test their qualification as 

foreign private issuers. 

The amendments to Form 20–F will 

accelerate the reporting deadline for 

annual reports on Form 20–F. The 

amendments to Exchange Act Rules 

13a–10 and 15d–10, which pertain to 

transition reports filed on Form 20–F, 

and the amendments to Exchange Act 

Rule 15d–2, which pertain to special 

financial reports filed by foreign private 

issuers, will conform the due dates for 

these reports with the new due date for 

annual reports on Form 20–F. Several of 

the adopted amendments to Form 20–F 

will require more disclosure in the 

annual reports filed by foreign private 

issuers. The disclosures required will 

include information about any changes 

in and disagreements with the 

registrant’s certifying accountant, ADR 

fees and payments made by depositaries 

to the foreign issuers whose securities 

underlie the ADR, and information 

about corporate governance. In addition, 

the amendments will eliminate the 

availability of the limited U.S. GAAP 

reconciliation option contained in Item 

17 of Form 20–F, and will eliminate an 

instruction to Item 17 of that Form, 

which permits certain foreign private 

issuers to omit segment data from their 

U.S. GAAP financial statements. 

These amendments will create a more 

level playing field between foreign 

private issuers and U.S. issuers because 

they will require disclosures from 

foreign private issuers that are currently 

required of domestic issuers. Foreign 

private issuers that file annual reports 

on Form 20–F will also be required to 

provide these annual reports in a 

timeframe that is closer to the annual 

report due dates imposed on domestic 

issuers. As a result, the amendments 

should put foreign private issuers and 

domestic issuers in a more similar 

position with respect to their 

compliance obligations under the 

Commission’s regulations, although the 

incremental costs of complying with 

these amendments may also create a 

disincentive for some foreign private 

issuers to enter the U.S. capital markets. 

The amendments may also facilitate 

capital formation by foreign companies 

in the U.S. capital markets by enabling 

investors to obtain more information 

about these companies in a timeframe 

that will make the information useful to 

them and in a manner that will allow for 

greater comparability to domestic 

issuers. This could affect the allocation 

of capital between foreign private 

issuers and domestic issuers. 

The amendments to Exchange Act 

Rule 13e–3, which reflect the newly 

adopted rules pertaining to the 

termination and deregistration of the 

reporting obligations of foreign private 

issuers, could require more foreign 

private issuers and domestic issuers to 

comply with that Rule and to file a 

Schedule 13E–3 as a result if more 

issuers decide to conduct going private 

transactions to terminate their 

registration and reporting obligations. 

This additional compliance obligation 

could create a disincentive for foreign 

private issuers to enter the U.S. markets. 

VII. Regulatory Flexibility Act 

Certification 

Under Section 605(b) of the 

Regulatory Flexibility Act,151 the 

Commission certified that the proposed 

amendments to Rule 405 of Regulation 

C, Form F–1, Form F–3, and Form F–4 

under the Securities Act, and Form 20– 

F, Rule 3b–4, Rule 13a–10, Rule 13e–3 

and Rule 15d–10 under the Exchange 

Act contained in this release, if adopted, 

will not have a significant economic 

impact on a substantial number of small 

entities. It included this certification in 

Part VIII of the Proposing Release. While 

the Commission encouraged written 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58321 

comments regarding this certification, 

no commenters responded to this 

request. 

VIII. Statutory Authority and Text of 

Final Amendments 

We are adopting amendments to the 

rules and forms pursuant to the 

authority set forth in Sections 6, 7, 10 

and 19 of the Securities Act, as 

amended, and Sections 3, 12, 13, 15, 23 

and 36 of the Exchange Act, as 

amended. 

List of Subjects in 17 CFR Parts 230, 

239, 240 and 249 

Reporting and recordkeeping 

requirements, Securities. 

Text of the Amendments 

■ For the reasons set out in the 

preamble, the Commission is amending 

Title 17, Chapter II of the Code of 

Federal Regulations as follows: 

PART 230—GENERAL RULES AND 

REGULATIONS, SECURITIES ACT OF 

1933 

■ 1. The authority citation for Part 230 

continues to read in part as follows: 

Authority: 15 U.S.C. 77b, 77c, 77d, 77f, 

77g, 77h, 77j, 77r, 77s, 77z–3, 77sss, 78c, 78d, 

78j, 78l, 78m, 78n, 78o, 78t, 78w, 78ll(d), 

78mm, 80a–8, 80a–24, 80a–28, 80a–29, 80a– 

30, and 80a–37, unless otherwise noted. 

* * * * * 

■ 2. Section 230.405 is amended by 

revising the definition of ‘‘foreign 

private issuer’’ to read as follows: 

§ 230.405 Definition of terms. 

* * * * * 

Foreign private issuer. (1) The term 

foreign private issuer means any foreign 

issuer other than a foreign government 

except an issuer meeting the following 

conditions as of the last business day of 

its most recently completed second 

fiscal quarter: 

(i) More than 50 percent of the 

outstanding voting securities of such 

issuer are directly or indirectly owned 

of record by residents of the United 

States; and 

(ii) Any of the following: 

(A) The majority of the executive 

officers or directors are United States 

citizens or residents; 

(B) More than 50 percent of the assets 

of the issuer are located in the United 

States; or 

(C) The business of the issuer is 

administered principally in the United 

States. 

(2) In the case of a new registrant with 

the Commission, the determination of 

whether an issuer is a foreign private 

issuer shall be made as of a date within 

30 days prior to the issuer’s filing of an 

initial registration statement under 

either the Act or the Securities 

Exchange Act of 1934. 

(3) Once an issuer qualifies as a 

foreign private issuer, it will 

immediately be able to use the forms 

and rules designated for foreign private 

issuers until it fails to qualify for this 

status at the end of its most recently 

completed second fiscal quarter. An 

issuer’s determination that it fails to 

qualify as a foreign private issuer 

governs its eligibility to use the forms 

and rules designated for foreign private 

issuers beginning on the first day of the 

fiscal year following the determination 

date. Once an issuer fails to qualify for 

foreign private issuer status, it will 

remain unqualified unless it meets the 

requirements for foreign private issuer 

status as of the last business day of its 

second fiscal quarter. 

* * * * * 

PART 239—FORMS PRESCRIBED 

UNDER THE SECURITIES ACT OF 1933 

■ 3. 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. 

* * * * * 

■ 4. Form F–1 (referenced in § 239.31) 

Part I is amended by: 

■ a. Revising paragraph (c) of Item 4; 

■ b. Adding paragraph (d) to Item 4; and 

■ c. Revising the Instruction to Item 4A. 

The revisions and addition read as 

follows: 

Note: The text of Form F–1 does not, and 

the amendments thereto will not, appear in 

the Code of Federal Regulations.] 

FORM F–1 

REGISTRATION STATEMENT UNDER 

THE SECURITIES ACT OF 1933 

* * * * * 

PART I 

* * * * * 

Item 4. Information with Respect to the 

Registrant and the Offering. 

Furnish the following information 

with respect to the Registrant. 

* * * * * 

(c) For the registrant’s fiscal years 

ending before December 15, 2011, 

information required by Item 17 of Form 

20–F may be furnished in lieu of the 

information specified by Item 18 thereof 

if the only securities being registered are 

non-convertible securities that are 

‘‘investment grade securities,’’ as 

defined below, or the only securities to 

be registered are to be offered: 

1. upon the exercise of outstanding 

rights granted by the issuer of the 

securities to be offered, if such rights are 

granted on a pro rata basis to all existing 

security holders of the class of securities 

to which the rights attach and there is 

no standby underwriting in the United 

States or similar arrangement; or 

2. pursuant to a dividend or interest 

reinvestment plan; or 

3. upon the conversion of outstanding 

convertible securities or upon the 

exercise of outstanding transferable 

warrants issued by the issuer of the 

securities to be offered, or by an affiliate 

of such issuer. 

(d) For the registrant’s fiscal years 

ending on or after December 15, 2009, 

information required by Item 16F of 

Form 20–F. 

* * * * * 

Item 4A. Material Changes. 

* * * * * 

Instruction. 

For the registrant’s fiscal years ending 

before December 15, 2011, financial 

statements or information required to be 

furnished by this Item shall be 

reconciled pursuant to either Item 17 or 

Item 18 of Form 20–F, whichever is 

applicable to the primary financial 

statements. For the registrant’s fiscal 

years ending on or after December 15, 

2011, financial statements or 

information required to be furnished by 

this Item shall be reconciled pursuant to 

Item 18 of Form 20–F. 

■ 5. Form F–3 (referenced in § 239.33) is 

amended by: 

■ a. Revising General Instruction I.B.2.; 

■ b. Revising General Instruction I.B.3.; 

■ c. Revising General Instruction I.B.4.; 

and 

■ d. Revising the Instruction to Item 5. 

The revisions read as follows: 

Note: The text of Form F–3 does not, and 

the amendments thereto will not, appear in 

the Code of Federal Regulations. 

FORM F–3 

REGISTRATION STATEMENT UNDER 

THE SECURITIES ACT OF 1933 

* * * * * 

GENERAL INSTRUCTIONS 

I. * * * 

* * * * * 

B. Transaction Requirements 

* * * * * 

2. Primary Offerings of Nonconvertible Investment Grade Securities. 

Non-convertible securities to be offered 

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58322 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

for cash if such securities are 

‘‘investment grade securities.’’ A nonconvertible security is an ‘‘investment 

grade security’’ if, at the time of sale, at 

least one nationally recognized 

statistical rating organization (as that 

term is used in Rule 15c3–1(c)(2)(vi)(F) 

under the Exchange Act (§ 240.15c3– 

1(c)(2)(vi)(F) of this chapter)) has rated 

the security in one of its generic rating 

categories that signifies investment 

grade; typically, the four highest rating 

categories (within which there may be 

subcategories or gradations indicating 

relative standing) signify investment 

grade. For the registrant’s fiscal years 

ending before December 15, 2011, in the 

case of securities registered pursuant to 

this paragraph, the financial statements 

included in this registration statement 

may comply with Item 17 or 18 of Form 

20–F. For the registrant’s fiscal years 

ending on or after December 15, 2011, 

in the case of securities registered 

pursuant to this paragraph, the financial 

statements included in this registration 

statement must comply with Item 18 of 

Form 20–F. 

3. Transactions Involving Secondary 

Offerings. Outstanding securities to be 

offered for the account of any person 

other than the issuer, including 

securities acquired by standby 

underwriters in connection with the call 

or redemption by the issuer of warrants 

or a class of convertible securities. In 

the case of such securities, the financial 

statements included in this registration 

statement may comply with Item 17 or 

18 of Form 20–F for a registrant’s fiscal 

years ending before December 15, 2011; 

and for the registrant’s fiscal years 

ending on or after December 15, 2011, 

the financial statements included in this 

registration statement must comply with 

Item 18 of Form 20–F. In addition, Form 

F–3 may be used by affiliates to register 

securities for resale pursuant to the 

conditions specified in General 

Instruction C to Form S–8 (§ 239.16b of 

this chapter). In the case of such 

securities, the financial statements 

included in this registration statement 

must comply with Item 18 of Form 20– 

F (§ 249.220f of this chapter). 

4. Rights Offerings, Dividend or 

Interest Reinvestment Plans, and 

Conversions or Warrants. Securities to 

be offered: (a) Upon the exercise of 

outstanding rights granted by the issuer 

of the securities to be offered, if such 

rights are granted pro rata to all existing 

security holders of the class of securities 

to which the rights attach; or (b) 

pursuant to a dividend or interest 

reinvestment plan; or (c) upon the 

conversion of outstanding convertible 

securities or upon the exercise of 

outstanding transferable warrants issued 

by the issuer of the securities to be 

offered, or by an affiliate of such issuer. 

In the case of securities registered 

pursuant to this paragraph, the financial 

statements included in this registration 

statement may comply with Item 17 or 

18 of Form 20–F for the registrant’s 

fiscal years ending before December 15, 

2011; and for the registrant’s fiscal years 

ending on or after December 15, 2011, 

the financial statements included in this 

registration statement must comply with 

Item 18 of Form 20–F. The registration 

of securities to be offered or sold in a 

standby underwriting in the United 

States or similar arrangement is not 

permitted pursuant to this paragraph. 

See paragraphs B.1., B.2., and B.3. of 

this Instruction. 

* * * * * 

Item 5. Material Changes 

* * * * * 

Instructions. 

1. For a registrant’s fiscal years ending 

before December 15, 2011, financial 

statements or information required to be 

furnished by this Item shall be 

reconciled pursuant to either Item 17 or 

18 of Form 20–F, whichever is 

applicable to the primary financial 

statements. For a registrant’s fiscal years 

ending on or after December 15, 2011, 

financial statements or information 

required to be furnished by this Item 

shall be reconciled pursuant to Item 18 

of Form 20–F. 

2. Material changes to be disclosed 

pursuant to Item 5(a) include changes in 

and disagreements with registrant’s 

certifying accountant. For the 

registrant’s fiscal years ending on or 

after December 15, 2009, disclosure 

pursuant to Item 16F of Form 20–F 

should be provided as of the date of the 

registration statement or prospectus. 

* * * * * 

■ 6. Form F–4 (referenced in § 239.34) is 

amended by: 

■ a. Revising Instruction 1 to Item 11; 

■ b. Revising Item 12(b)(2) introductory 

text; 

■ c. In Item 12(b)(3)(vi)(B), removing the 

period and adding in its place a 

semicolon; 

■ d. Revising Item 12(b)(3)(vii); 

■ e. In Item 12(b)(3)(viii), removing the 

period and adding in its place ‘‘; and’’ 

and adding Item 12(b)(3)(ix); 

■ f. Revising Instruction 1 to Item 13; 

■ g. Revising Item 14(h); 

■ h. In Item 14(i), removing the period 

and adding in its place ‘‘; and’’; 

■ i. Adding Item 14(j); and 

■ j. In Item 17(b)(5)(ii), removing the 

period and adding in its place ‘‘; and’’ 

and adding Item 17(b)(6). 

The revisions and additions read as 

follows: 

[Note: The text of Form F–4 does not, and 

the amendments thereto will not, appear in 

the Code of Federal Regulations.] 

FORM F–4 

REGISTRATION STATEMENT UNDER 

THE SECURITIES ACT OF 1933 

* * * * * 

Item 11. Incorporation of Certain 

Information by Reference 

* * * * * 

Instructions 

1. For the registrant’s fiscal years 

ending before December 15, 2011, all 

annual reports or registration statements 

incorporated by reference pursuant to 

Item 11 of this Form shall contain 

financial statements that comply with 

Item 18 of Form 20–F, except that 

financial statements of the registrants 

may comply with Item 17 of 

Form 20–F if the only securities being 

registered are investment grade 

securities as defined in the General 

Instructions to Form F–3. For the 

registrant’s fiscal years ending on or 

after December 15, 2011, all annual 

reports or registration statements 

incorporated by reference pursuant to 

Item 11 of this Form shall contain 

financial statements that comply with 

Item 18 of Form 20–F. 

* * * * * 

Item 12. Information With Respect to F– 

3 Registrants 

* * * * * 

(b) * * * 

(2) For the registrant’s fiscal years 

ending before December 15, 2011, 

include financial statements and 

information as required by Item 18 of 

Form 20–F, except that financial 

statements of the registrant may comply 

with Item 17 of Form 20–F if the only 

securities being registered are 

investment grade securities as defined 

in the General Instructions to Form F– 

3. For the registrant’s fiscal years ending 

on or after December 15, 2011, include 

financial statements and information as 

required by Item 18 of Form 20–F. In 

addition, provide: 

(3) * * * 

(vii) For the registrant’s fiscal years 

ending before December 15, 2011, 

financial statements required by Item 18 

of Form 20–F, except that financial 

statements of the registrant may comply 

with Item 17 of Form 20–F if the only 

securities being registered are 

investment grade securities as defined 

in the General Instructions to Form F– 

3, and financial information required by 

Rule 3–05 and Article 11 of Regulation 

S–X with respect to transactions other 

than that pursuant to which the 

securities being registered are to be 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58323 

issued. (Schedules required under 

Regulation S–X shall be filed as 

‘‘Financial Statement Schedules’’ 

pursuant to Item 21 of this Form, but 

need not be provided with respect to the 

company being acquired if information 

is being furnished pursuant to Item 

17(a) of this Form.) For the registrant’s 

fiscal years ending on or after December 

15, 2011, financial statements required 

by Item 18 of Form 20–F, and financial 

information required by Rule 3–05 and 

Article 11 of Regulation S–X with 

respect to transactions other than that 

pursuant to which the securities being 

registered are to be issued; 

* * * * * 

(ix) For the registrant’s fiscal years 

ending on or after December 15, 2009, 

Item 16F of Form 20–F, change in 

registrant’s certifying accountant. 

Item 13. Incorporation of Certain 

Information by Reference 

* * * * * 

Instructions 

1. For the registrant’s fiscal years 

ending before December 15, 2011, all 

annual reports incorporated by 

reference pursuant to Item 13 of this 

Form shall contain financial statements 

that comply with Item 18 of Form 20– 

F, except that financial statements of the 

registrants may comply with Item 17 of 

Form 20–F if the only securities being 

registered are investment grade 

securities as defined in the General 

Instructions to Form F–3. For the 

registrant’s fiscal years ending on or 

after December 15, 2011, all annual 

reports incorporated by reference 

pursuant to Item 13 of this Form shall 

contain financial statements that 

comply with Item 18 of Form 20–F. 

* * * * * 

Item 14. Information With Respect to 

Foreign Registrants Other Than F–3 

Registrants 

* * * * * 

(h) For the registrant’s fiscal years 

ending before December 15, 2011, 

financial statements required by Item 18 

of Form 20–F, except that financial 

statements of the registrants may 

comply with Item 17 of Form 20–F if the 

only securities being registered are 

investment grade securities as defined 

in the General Instructions to Form F– 

1; and for the registrant’s fiscal years 

ending on or after December 15, 2011, 

financial statements required by Item 18 

of Form 20–F. In addition, financial 

information required by Rule 3–05 and 

Article 11 of Regulation S–X with 

respect to transactions other than that 

pursuant to which the securities being 

registered are to be issued. (Schedules 

required by Regulation S–X shall be 

filed as ‘‘Financial Statement 

Schedules’’ pursuant to Item 21 of this 

Form.); 

* * * * * 

(j) For the registrant’s fiscal years 

ending on or after December 15, 2009, 

Item 16F of Form 20–F, change in 

registrant’s certifying accountant. 

* * * * * 

Item 17. Information With Respect to 

Foreign Companies Other Than F–3 

Companies 

* * * * * 

(b) * * * 

(6) For the registrant’s fiscal years 

ending on or after December 15, 2009, 

Item 16F of Form 20–F, change in 

registrant’s certifying accountant. 

* * * * * 

PART 240—GENERAL RULES AND 

REGULATIONS, SECURITIES 

EXCHANGE ACT OF 1934 

■ 7. 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. 

* * * * * 

■ 8. Section 240.3b–4 is amended by: 

■ a. Revising paragraph (c) introductory 

text; 

■ b. Adding paragraphs (d) and (e); and 

■ c. Removing the authority citations 

following the section. 

The revision and addition read as 

follows: 

§ 240.3b–4 Definition of ‘‘foreign 

government,’’ ‘‘foreign issuer’’ and ‘‘foreign 

private issuer’’. 

* * * * * 

(c) The term foreign private issuer 

means any foreign issuer other than a 

foreign government except for an issuer 

meeting the following conditions as of 

the last business day of its most recently 

completed second fiscal quarter: 

* * * * * 

(d) Notwithstanding paragraph (c) of 

this section, in the case of a new 

registrant with the Commission, the 

determination of whether an issuer is a 

foreign private issuer will be made as of 

a date within 30 days prior to the 

issuer’s filing of an initial registration 

statement under either the Act or the 

Securities Act of 1933. 

(e) Once an issuer qualifies as a 

foreign private issuer, it will 

immediately be able to use the forms 

and rules designated for foreign private 

issuers until it fails to qualify for this 

status at the end of its most recently 

completed second fiscal quarter. An 

issuer’s determination that it fails to 

qualify as a foreign private issuer 

governs its eligibility to use the forms 

and rules designated for foreign private 

issuers beginning on the first day of the 

fiscal year following the determination 

date. Once an issuer fails to qualify for 

foreign private issuer status, it will 

remain unqualified unless it meets the 

requirements for foreign private issuer 

status as of the last business day of its 

second fiscal quarter. 

■ 9. Section 240.13a–10 is amended by 

revising paragraph (g)(3) to read as 

follows: 

§ 240.13a–10 Transition reports. 

* * * * * 

(g) * * * 

(3) The report for the transition period 

shall be filed on Form 20–F responding 

to all items to which such issuer is 

required to respond when Form 20–F is 

used as an annual report. The financial 

statements for the transition period filed 

therewith shall be audited. The report 

shall be filed within the following 

period: 

(i) Within six months after either the 

close of the transition period or the date 

on which the issuer made the 

determination to change the fiscal 

closing date, whichever is later, for new 

fiscal years ending before December 15, 

2011; and 

(ii) Within four months after either 

the close of the transition period or the 

date on which the issuer made the 

determination to change the fiscal 

closing date, whichever is later, for new 

fiscal years ending on or after December 

15, 2011. 

* * * * * 

■ 10. Section 240.13e–3 is amended by 

revising paragraph (a)(3)(ii)(A) to read as 

follows: 

§ 240.13e–3 Going private transactions by 

certain issuers or their affiliates. 

(a) * * * 

(3) * * * 

(ii) * * * 

(A) Causing any class of equity 

securities of the issuer which is subject 

to section 12(g) or section 15(d) of the 

Act to become eligible for termination of 

registration under Rule 12g–4 

(§ 240.12g–4) or Rule 12h–6 (§ 240.12h– 

6), or causing the reporting obligations 

with respect to such class to become 

eligible for termination under Rule 12h– 

6 (§ 240.12h–6); or suspension under 

Rule 12h–3 (§ 240.12h–3) or section 

15(d); or 

* * * * * 

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58324 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

■ 11. Section 240.15d–2 is amended by 

revising paragraph (a) and removing the 

authority citations following the section 

to read as follows: 

§ 240.15d–2 Special financial report. 

(a) If the registration statement under 

the Securities Act of 1933 did not 

contain certified financial statements for 

the registrant’s last full fiscal year (or for 

the life of the registrant if less than a full 

fiscal year) preceding the fiscal year in 

which the registration statement became 

effective, the registrant shall, within 90 

days after the effective date of the 

registration statement, file a special 

report furnishing certified financial 

statements for such last full fiscal year 

or other period, as the case may be, 

meeting the requirements of the form 

appropriate for annual reports of the 

registrant. If the registrant is a foreign 

private issuer as defined in § 230.405 of 

this chapter, then the special financial 

report shall be filed on the appropriate 

form for annual reports of the registrant 

and shall be filed within the following 

period: 

(1) By the later of 90 days after the 

date on which the registration statement 

became effective, or six months 

following the end of the registrant’s full 

fiscal year, for fiscal years ending before 

December 15, 2011; and 

(2) By the later of 90 days after the 

date on which the registration statement 

became effective, or four months 

following the end of the registrant’s 

latest full fiscal year, for fiscal years 

ending on or after December 15, 2011. 

* * * * * 

■ 12. Section 240.15d–10 is amended by 

revising paragraph (g)(3) to read as 

follows: 

§ 240.15d–10 Transition reports. 

* * * * * 

(g) * * * 

(3) The report for the transition period 

shall be filed on Form 20–F responding 

to all items to which such issuer is 

required to respond when Form 20–F is 

used as an annual report. The financial 

statements for the transition period filed 

therewith shall be audited. The report 

shall be filed within the following 

period: 

(i) Within six months after either the 

close of the transition period or the date 

on which the issuer made the 

determination to change the fiscal 

closing date, whichever is later, for new 

fiscal years ending before December 15, 

2011; and 

(ii) Within four months after either 

the close of the transition period or the 

date on which the issuer made the 

determination to change the fiscal 

closing date, whichever is later, for new 

fiscal years ending on or after December 

15, 2011. 

* * * * * 

PART 249—FORMS, SECURITIES 

EXCHANGE ACT OF 1934 

■ 13. The authority citation for Part 249 

continues to read in part as follows: 

Authority: 15 U.S.C. 78a et seq. and 7201 

et seq.; and 18 U.S.C. 1350, unless otherwise 

noted. 

* * * * * 

■ 14. Form 20–F (referenced in 

§ 249.220f) is amended by: 

■ a. Revising General Instructions A.(b) 

and E.(c); 

■ b. Revising Item 12.D introductory 

text, Item 12.D.3, and Instruction 1 to 

Item 12; 

■ c. Revising Item 12.D to revise the 

phrase ‘‘American depositary receipts’’ 

to read ‘‘American Depositary Receipts’’ 

and adding Item 12.D.4; 

■ d. Adding Item 16F and Instructions 

to Item 16F; 

■ e. Adding Item 16G and an Instruction 

to Item 16G; 

■ f. Revising Instruction 3 to Item 17; 

and 

■ g. Revising Instruction 1 to Item 18. 

The additions and revisions read as 

follows: 

[Note: The text of Form 20–F does 

not, and the amendments thereto will 

not, appear in the Code of Federal 

Regulations.] 

FORM 20–F 

* * * * * 

GENERAL INSTRUCTIONS 

A. Who May Use Form 20–F and When 

It Must Be Filed. 

* * * * * 

(b) A foreign private issuer must file 

its annual report on this Form within 

the following period: 

(1) Within six months after the end of 

the fiscal year covered by the report for 

fiscal years ending before December 15, 

2011; and 

(2) Within four months after the end 

of the fiscal year covered by the report 

for fiscal years ending on or after 

December 15, 2011. 

* * * * * 

E. Which Items to Respond to in 

Registration Statements and Annual 

Reports. 

* * * * * 

(c) Financial Statements. 

(1) For an issuer’s fiscal years ending 

before December 15, 2011, an Exchange 

Act registration statement or annual 

report filed on this Form must contain 

the financial statements and related 

information specified in Item 17 of this 

Form. We encourage you to provide the 

financial statements and related 

information specified in Item 18 of this 

Form in lieu of Item 17, but the Item 18 

statements and information are not 

required. In certain circumstances, 

Forms F–1, F–3 or F–4 for the 

registration of securities under the 

Securities Act require that you provide 

the financial statements and related 

information specified in Item 18 in your 

annual report on Form 20–F. Consult 

those Securities Act forms for the 

specific requirements and consider the 

potential advantages of complying with 

Item 18 instead of Item 17 of this Form. 

Note that Items 17 and 18 may require 

you to file financial statements of other 

entities in certain circumstances. These 

circumstances are described in 

Regulation S–X. 

(2) For the issuer’s fiscal years ending 

on or after December 15, 2011, an 

Exchange Act registration statement or 

annual report filed on this Form must 

contain the financial statements and 

related information specified in Item 18 

of this Form. Note that Items 17 and 18 

may require you to file the financial 

statements of other entities in certain 

circumstances. These circumstances are 

described in Regulation S–X. 

(3) The financial statements must be 

audited in accordance with U.S. 

generally accepted auditing standards, 

and the auditor must comply with the 

U.S. standards for auditor 

independence. If you have any 

questions about these requirements, 

contact the Office of Chief Accountant 

in the Division of Corporation Finance 

at (202) 551–3400. 

* * * * * 

Item 12. Description of Securities Other 

than Equity Securities. 

* * * * * 

D. American Depositary Shares. If you 

are registering securities represented by 

American Depositary Receipts in a 

sponsored facility, provide the 

following information. 

* * * * * 

3. Describe all fees and charges that a 

holder of American Depositary Receipts 

may have to pay, either directly or 

indirectly. Indicate the type of service, 

the amount of the fees or charges and to 

whom the fees or charges are paid. In 

particular, provide information about 

any fees or charges in connection with 

(a) depositing or substituting the 

underlying shares; (b) receiving or 

distributing dividends; (c) selling or 

exercising rights; (d) withdrawing an 

underlying security; (e) transferring, 

splitting or grouping receipts; and (f) 

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general depositary services, particularly 

those charged on an annual basis. 

Provide information about the 

depositary’s right, if any, to collect fees 

and charges by offsetting them against 

dividends received and deposited 

securities. 

4. In addition, describe all fees and 

other direct and indirect payments 

made by the depositary to the foreign 

issuer of the deposited securities. 

Instructions to Item 12: 

1. You do not need to provide the 

information called for by this Item if 

you are using the form as an annual 

report for your fiscal years ending before 

December 15, 2009. For your fiscal years 

ending on or after December 15, 2009, 

except for Item 12.D.3. and Item 12.D.4., 

you do not need to provide the 

information called for by this Item if you 

are using this form as an annual report. 

* * * * * 

Item 16F. Change in Registrant’s 

Certifying Accountant. 

(a)(1) If during the registrant’s two 

most recent fiscal years or any 

subsequent interim period, an 

independent accountant who was 

previously engaged as the principal 

accountant to audit the registrant’s 

financial statements, or an independent 

accountant who was previously engaged 

to audit a significant subsidiary and on 

whom the principal accountant 

expressed reliance in its report, has 

resigned (or indicated it has declined to 

stand for re-election after the 

completion of the current audit) or was 

dismissed, then the registrant shall: 

(i) State whether the former 

accountant resigned, declined to stand 

for re-election or was dismissed and the 

date thereof. 

(ii) State whether the principal 

accountant’s report on the financial 

statements for either of the past two 

years contained an adverse opinion or a 

disclaimer of opinion, or was qualified 

or modified as to uncertainty, audit 

scope, or accounting principles; and 

also describe the nature of each such 

adverse opinion, disclaimer of opinion, 

modification, or qualification. 

(iii) State whether the decision to 

change accountants was recommended 

or approved by: 

(A) Any audit or similar committee of 

the board of directors, if the issuer has 

such a committee; or 

(B) The board of directors, if the 

issuer has no such committee. 

(iv) State whether during the 

registrant’s two most recent fiscal years 

and any subsequent interim period 

preceding such resignation, declination 

or dismissal there were any 

disagreements with the former 

accountant on any matter of accounting 

principles or practices, financial 

statement disclosure, or auditing scope 

or procedure, which disagreement(s), if 

not resolved to the satisfaction of the 

former accountant, would have caused 

it to make reference to the subject matter 

of the disagreement(s) in connection 

with its report. The disagreements 

required to be reported in response to 

this Item include both those resolved to 

the former accountant’s satisfaction and 

those not resolved to the former 

accountant’s satisfaction. Disagreements 

contemplated by this Item are those that 

occur at the decision-making level, i.e., 

between personnel of the registrant 

responsible for presentation of its 

financial statements and personnel of 

the accounting firm responsible for 

rendering its report. Also: 

(A) Describe each such disagreement; 

(B) State whether any audit or similar 

committee of the board of directors, or 

the board of directors, discussed the 

subject matter of each of such 

disagreements with the former 

accountant; and 

(C) State whether the registrant has 

authorized the former accountant to 

respond fully to the inquiries of the 

successor accountant concerning the 

subject matter of each of such 

disagreements and, if not, describe the 

nature of any limitation thereon and the 

reason therefor. 

(v) Provide the information required 

by paragraph (a)(1)(iv) of this Item for 

each of the kinds of events (even though 

the registrant and the former accountant 

did not express a difference of opinion 

regarding the event) listed in paragraphs 

(a)(1)(v) (A) through (D) of this Item, 

that occurred within the registrant’s two 

most recent fiscal years and any 

subsequent interim period preceding the 

former accountant’s resignation, 

declination to stand for re-election, or 

dismissal (‘‘reportable events’’). If the 

event led to a disagreement or difference 

of opinion, then the event should be 

reported as a disagreement under 

paragraph (a)(1)(iv) of this Item and 

need not be repeated under this 

paragraph. 

(A) The accountant’s having advised 

the registrant that the internal controls 

necessary for the registrant to develop 

reliable financial statements do not 

exist; 

(B) The accountant’s having advised 

the registrant that information has come 

to the accountant’s attention that has led 

it to no longer be able to rely on 

management’s representations, or that 

has made it unwilling to be associated 

with the financial statements prepared 

by management; 

(C)(1) The accountant’s having 

advised the registrant of the need to 

expand significantly the scope of its 

audit, or that information has come to 

the accountant’s attention during the 

time period covered by Item 

16F(a)(1)(iv), that if further investigated 

may: 

(i) Materially impact the fairness or 

reliability of either: a previously issued 

audit report or the underlying financial 

statements; or the financial statements 

issued or to be issued covering the fiscal 

period(s) subsequent to the date of the 

most recent financial statements 

covered by an audit report (including 

information that may prevent it from 

rendering an unqualified audit report on 

those financial statements); or 

(ii) Cause it to be unwilling to rely on 

management’s representations or be 

associated with the registrant’s financial 

statements; and 

(2) Due to the accountant’s resignation 

(due to audit scope limitations or 

otherwise) or dismissal, or for any other 

reason, the accountant did not so 

expand the scope of its audit or conduct 

such further investigation; or 

(D)(1) The accountant’s having 

advised the registrant that information 

has come to the accountant’s attention 

that it has concluded materially impacts 

the fairness or reliability of either (i) a 

previously issued audit report or the 

underlying financial statements, or (ii) 

the financial statements issued or to be 

issued covering the fiscal period(s) 

subsequent to the date of the most 

recent financial statements covered by 

an audit report (including information 

that, unless resolved to the accountant’s 

satisfaction, would prevent it from 

rendering an unqualified audit report on 

those financial statements); and 

(2) Due to the accountant’s 

resignation, dismissal or declination to 

stand for re-election, or for any other 

reason, the issue has not been resolved 

to the accountant’s satisfaction prior to 

its resignation, dismissal or declination 

to stand for re-election. 

(2) If during the registrant’s two most 

recent fiscal years or any subsequent 

interim period, a new independent 

accountant has been engaged as either 

the principal accountant to audit the 

registrant’s financial statements, or as an 

independent accountant to audit a 

significant subsidiary and on whom the 

principal accountant is expected to 

express reliance in its report, then the 

registrant shall identify the newly 

engaged accountant and indicate the 

date of such accountant’s engagement. 

In addition, if during the registrant’s 

two most recent fiscal years, and any 

subsequent interim period prior to 

engaging that accountant, the registrant 

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58326 Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 

(or someone on its behalf) consulted the 

newly engaged accountant regarding: 

(i) Either: The application of 

accounting principles to a specified 

transaction, either completed or 

proposed; or the type of audit opinion 

that might be rendered on the 

registrant’s financial statements, and 

either a written report was provided to 

the registrant or oral advice was 

provided that the new accountant 

concluded was an important factor 

considered by the registrant in reaching 

a decision as to the accounting, auditing 

or financial reporting issue; or 

(ii) Any matter that was either the 

subject of a disagreement (as defined in 

Item 16F(a)(1)(iv) and the related 

instructions to this Item) or a reportable 

event (as described in Item 16F(a)(1)(v), 

then the registrant shall: 

(A) So state and identify the issues 

that were the subjects of those 

consultations; 

(B) Briefly describe the views of the 

newly engaged accountant as expressed 

orally or in writing to the registrant on 

each such issue and, if written views 

were received by the registrant, file 

them as an exhibit to the annual report 

requiring compliance with this Item 

16F(a); 

(C) State whether the former 

accountant was consulted by the 

registrant regarding any such issues, and 

if so, provide a summary of the former 

accountant’s views; and 

(D) Request the newly engaged 

accountant to review the disclosure 

required by this Item 16F(a) before it is 

filed with the Commission and provide 

the new accountant the opportunity to 

furnish the registrant with a letter 

addressed to the Commission containing 

any new information, clarification of the 

registrant’s expression of its views, or 

the respects in which it does not agree 

with the statements made by the 

registrant in response to Item 16F(a). 

The registrant shall file any such letter 

as an exhibit to the annual report 

containing the disclosure required by 

this Item. 

(3) The registrant shall provide the 

former accountant with a copy of the 

disclosures it is making in response to 

this Item 16F(a). The registrant shall 

request the former accountant to furnish 

the registrant with a letter addressed to 

the Commission stating whether it 

agrees with the statements made by the 

registrant in response to this Item 16F(a) 

and, if not, stating the respects in which 

it does not agree. The registrant shall 

file the former accountant’s letter as an 

exhibit to the annual report or 

registration statement containing this 

disclosure. If the change in accountants 

occurred less than 30 days prior to the 

filing of the annual report or registration 

statement and the former accountant’s 

letter is unavailable at the time of the 

filing, then the registrant shall request 

the former accountant to provide the 

letter as promptly as possible so that the 

registrant can file the letter with the 

Commission within ten business days 

after the filing of the annual report or 

registration statement. In either case, the 

former accountant may provide the 

registrant with an interim letter 

highlighting specific areas of concern 

and indicating that a more detailed 

letter will be forthcoming. If not filed 

with the annual report or registration 

statement containing the registrant’s 

disclosure under this Item 16F(a), then 

the interim letter, if any, shall be filed 

by the registrant by amendment 

promptly. 

(b) If: (1) In connection with a change 

in accountants subject to paragraph (a) 

of this Item 16F, there was any 

disagreement of the type described in 

paragraph (a)(1)(iv) or any reportable 

event as described in paragraph (a)(1)(v) 

of this Item; 

(2) During the fiscal year in which the 

change in accountants took place or 

during the subsequent fiscal year, there 

have been any transactions or events 

similar to those which involved such 

disagreement or reportable event; and 

(3) Such transactions or events were 

material and were accounted for or 

disclosed in a manner different from 

that which the former accountants 

apparently would have concluded was 

required, the registrant shall state the 

existence and nature of the 

disagreement or reportable event and 

also state the effect on the financial 

statements if the method had been 

followed which the former accountants 

apparently would have concluded was 

required. These disclosures need not be 

made if the method asserted by the 

former accountants ceases to be 

generally accepted because of 

authoritative standards or 

interpretations subsequently issued. 

Instructions to Item 16F: 

1. Item 16F applies to all annual 

reports and registration statements filed 

on Form 20–F for the issuer’s fiscal 

years ending on or after December 15, 

2009. 

2. The disclosure called for by 

paragraph (a) of this Item need not be 

provided if it has been previously 

reported, as that term is defined in Rule 

12b–2 under the Exchange Act 

(§ 240.12b–2 of this chapter). The 

disclosure called for by paragraph (b) of 

this Item must be furnished, where 

required, notwithstanding any prior 

disclosure about accountant changes or 

disagreements. 

3. The information required by 

paragraph (a) of this Item need not be 

provided for a company being acquired 

by the registrant in a transaction being 

registered on Form F–4 that is not 

subject to the filing requirements of 

either Section 13(a) or 15(d) of the 

Exchange Act. 

4. The term ‘‘disagreements’’ as used 

in this Item shall be interpreted broadly 

to include any difference of opinion 

concerning any matter of accounting 

principles or practices, financial 

statement disclosure, or auditing scope 

or procedure which (if not resolved to 

the satisfaction of the former 

accountant) would have caused it to 

make reference to the subject matter of 

the disagreement in connection with its 

report. It is not necessary for there to 

have been an argument to have had a 

disagreement, merely a difference of 

opinion. For purposes of this Item, 

however, the term ‘‘disagreements’’ does 

not include initial differences of 

opinion based on incomplete facts or 

preliminary information that were later 

resolved to the former accountant’s 

satisfaction by, and providing the 

registrant and the accountant do not 

continue to have a difference of opinion 

upon, obtaining additional relevant facts 

or information. 

5. In determining whether any 

disagreement or reportable event has 

occurred, an oral communication from 

the engagement partner or another 

person responsible for rendering the 

accounting firm’s opinion (or his/her 

designee) will generally suffice as the 

accountant advising the registrant of a 

reportable event or as a statement of a 

disagreement at the ‘‘decision-making 

level’’ within the accounting firm and 

require disclosure under this Item. 

6. The term ‘‘board of directors’’ as 

used in this Item 16F has the meaning 

set forth in § 240.10A–3(e)(2). 

Item 16G. Corporate Governance 

If the registrant’s securities are listed 

on a national securities exchange, 

provide a concise summary of any 

significant ways in which its corporate 

governance practices differ from those 

followed by domestic companies under 

the listing standards of that exchange. 

Instruction to Item 16G: 

A registrant must provide the 

information required in Item 16G 

beginning with the annual report that its 

files for its first fiscal year ending on or 

after December 15, 2008. Item 16G only 

applies to annual reports, and not to 

registration statements on Form 20–F. 

Registrants should provide a brief and 

general discussion, rather than a 

detailed, item-by-item analysis. 

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Federal Register / Vol. 73, No. 194 / Monday, October 6, 2008 / Rules and Regulations 58327 

Item 17. Financial Statements 

* * * * * 

Instructions: 

* * * * * 

3. For its fiscal years ending before 

December 15, 2009, if the registrant 

presents its financial statements 

according to generally accepted 

accounting principles in the United 

States except for SFAS No. 131 and if 

it furnishes the information relating to 

categories of activity required by Items 

4.B.1. and 4.B.2. of this Form, then such 

financial statements will be considered 

to comply with this Item, even if the 

auditor’s report is qualified for 

noncompliance with SFAS No. 131. 

Such report and financial statements, 

however, must comply with all other 

applicable requirements. 

* * * * * 

Item 18. Financial Statements 

* * * * * 

Instruction to Item 18: 

1. For fiscal years ending before 

December 15, 2009, all of the 

instructions to Item 17 also apply to this 

Item, except Instruction 3 to Item 17, 

which does not apply. For all fiscal 

years ending on or after December 15, 

2009, all of the instructions to Item 17 

also apply to this Item. 

* * * * * 

Dated: September 23, 2008. 

By the Commission. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc.E8–22760 Filed 10–3–08; 8:45 am] 

BILLING CODE 8011–01–P 

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