Document ID: SEC-2007-0045-0001
Agency: sec
Document Type: Proposed Rule
Title: Termination of a Foreign Private Issuers Registration of a Class of Securities Under Section 12(g) and Duty To File Reports Under Section 13(a) or 15(d) of the Securities Exchange Act of 1934
Posted Date: 2007-01-11T05:00Z

[Federal Register: January 11, 2007 (Volume 72, Number 7)]
[Proposed Rules]               
[Page 1383-1414]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ja07-25]                         

[[Page 1383]]

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Part II

 Securities and Exchange Commission

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17 CFR Parts 200, 232, 240, 249

 Termination of a Foreign Private Issuer's Registration of a Class of 
Securities Under Section 12(g) and Duty To File Reports Under Section 
13(a) or 15(d) of the Securities Exchange Act of 1934; Proposed Rule

[[Page 1384]]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 200, 232, 240 and 249

[Release No. 34-55005; International Series Release No. 1300; File No. 
S7-12-05]
RIN 3235-AJ38

 
Termination of a Foreign Private Issuer's Registration of a Class 
of Securities Under Section 12(g) and Duty To File Reports Under 
Section 13(a) or 15(d) of the Securities Exchange Act of 1934

AGENCY: Securities and Exchange Commission.

ACTION: Reproposed rule.

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SUMMARY: We are reproposing amendments to the rules that govern when a 
foreign private issuer may terminate the registration of a class of 
equity securities under section 12(g) of the Securities Exchange Act of 
1934 (``Exchange Act'') and the corresponding duty to file reports 
required under section 13(a) of the Exchange Act, and when it may cease 
its reporting obligations regarding a class of equity or debt 
securities under section 15(d) of the Exchange Act. Under the current 
rules, a foreign private issuer may find it difficult to terminate its 
Exchange Act registration and reporting obligations despite the fact 
that there is relatively little interest in the issuer's U.S.-
registered securities among United States investors. Moreover, 
currently a foreign private issuer can only suspend, and cannot 
terminate, a duty to report arising under section 15(d) of the Exchange 
Act. Reproposed Exchange Act Rule 12h-6 would permit the termination of 
Exchange Act reporting regarding a class of equity securities under 
either section 12(g) or section 15(d) of the Exchange Act by a foreign 
private issuer that meets a quantitative benchmark designed to measure 
relative U.S. market interest for that class of securities, which does 
not depend on a head count of the issuer's U.S. security holders. The 
reproposed benchmark would require the comparison of the average daily 
trading volume of an issuer's securities in the United States with that 
in its primary trading market. Because the Commission did not fully 
address this approach when it originally proposed Rule 12h-6, and 
because of other proposed changes to Rule 12h-6 not fully discussed in 
the original rule proposal, we are reproposing Rule 12h-6 and the 
accompanying rule amendments. These rule amendments would seek to 
provide U.S. investors with ready access through the Internet on an 
ongoing basis to material information about a foreign private issuer of 
equity securities that is required by its home country after it has 
exited the Exchange Act reporting system.

DATES: Comments must be received on or before February 12, 2007. Given 
the advanced stage of this rulemaking initiative, the Commission 
anticipates taking further action as expeditiously as possible after 
the end of the comment period. It therefore strongly encourages the 
public to submit their comments within the prescribed comment period. 
Comments received after that point cannot be assured of full 
consideration by the Commission.

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number S7-12-05 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov
). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number S7-12-05. This file number 
should be included on the subject line if e-mail is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
Internet Web site http://www.sec.gov/rules/proposed.shtml. Comments 

also are available for public inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549. All comments received will be posted without change; we do not 
edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.

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

SUPPLEMENTARY INFORMATION: We are reproposing amendments to Commission 
Rule 30-1,\1\ Rule 101 \2\ of Regulation S-T,\3\ and Rules 12g3-2, 12g-
4 and 12h-3 \4\ under the Exchange Act,\5\ and reproposing new Rule 
12h-6 \6\ and Form 15F \7\ under the Exchange Act.
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    \1\ 17 CFR 200.30-1.
    \2\ 17 CFR 232.101.
    \3\ 17 CFR 232.10 et seq.
    \4\ 17 CFR 240.12g3-2, 240.12g-4 and 240.12h-3.
    \5\ 15 U.S.C. 78a et seq.
    \6\ 17 CFR 240.12h-6, as reproposed.
    \7\ 17 CFR 249.324, as reproposed.
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Table of Contents

I. Executive Summary and Background
    A. Introduction
    B. Overview of the Current Exchange Act Exit Rules
    C. Concerns Regarding the Current Exchange Act Exit Rules
    D. The Originally Proposed Rule Amendments
    E. Principal Comments Regarding the Proposed Rule Amendments
    F. Summary of the Reproposed Rule Amendments
II. Discussion
    A. Conditions for Equity Securities Issuers
    1. Quantitative Benchmarks
    a. Non-Record Holder Benchmark
    i. One Year Ineligibility Period After Delisting
    ii. One Year Ineligibility Period After Termination of ADR 
Facility
    b. Alternative 300 Holder Condition
    2. Prior Exchange Act Reporting Condition
    3. The One Year Dormancy Condition
    4. Foreign Listing Condition
    B. Debt Securities Provision
    C. Revised Counting Method
    D. Expanded Scope of Rule 12h-6
    1. Application of Rule 12h-6 to Successor Issuers
    2. Application of Rule 12h-6 to Prior Form 15 Filers
    E. Public Notice Requirement
    F. Form 15F
    G. Amended Rules 12g-4 and 12h-3
    H. Amendment Regarding the Rule 12g3-2(b) Exemption
    1. Extension of the Rule 12g3-2(b) Exemption Under Reproposed 
Rule 12g3-2(e)
    2. Electronic Publishing of Home Country Documents
III. Paperwork Reduction Act Analysis
IV. Cost-Benefit Analysis
V. Consideration of Impact on the Economy, Burden on Competition and 
Promotion of Efficiency, Competition and Capital Formation Analysis
VI. Regulatory Flexibility Act Certification
VII. Statutory Basis and Text of Proposed Rule Amendments

I. Executive Summary and Background

A. Introduction

    On December 23, 2005, the Commission issued proposed amendments to 
its current rules governing when a foreign private

[[Page 1385]]

issuer \8\ may exit the Exchange Act reporting regime.\9\ The 
Commission proposed these rule amendments out of concern that, due to 
several trends, including the increased internationalization of the 
U.S. securities markets in recent decades, it has become difficult for 
a foreign private issuer to exit the Exchange Act reporting system even 
when there is relatively little U.S. investor interest in its U.S.-
registered securities.\10\
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    \8\ As defined in Rule 3b-4(c) (17 CFR 240.3b-4(c)), a foreign 
private issuer is a corporation or other organization incorporated 
or organized in a foreign country that either has 50 percent or less 
of its outstanding voting securities held of record by United States 
residents or, if more than 50 percent of its voting securities are 
held by U.S. residents, about which none of the following are true:
    (1) A majority of its executive officers or directors are U.S. 
citizens or residents;
    (2) More than 50 percent of its assets are located in the United 
States; and
    (3) The issuer's business is administered principally in the 
United States.
    \9\ Release No. 34-53020 (December 23, 2005), 70 FR 77688 
(December 30, 2005) (Original Proposing Release).
    \10\ See Original Proposing Release, 70 FR at 77689-77690.
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    We recognized that U.S. investors benefit from the investment 
opportunities provided by foreign private issuers registering their 
securities with the Commission and listing and publicly offering those 
securities in the United States. However, because of the burdens and 
uncertainties associated with terminating registration and reporting 
under the Exchange Act, the current exit process may serve as a 
disincentive to foreign private issuers accessing the U.S. public 
capital markets. In order to remove this disincentive, we proposed to 
amend the current Exchange Act exit rules for foreign private issuers.
    We received over 50 letters commenting on the proposed rule 
amendments.\11\ While most of the commenters supported the purpose and 
general framework of the proposed rulemaking, many expressed concern 
that the rule proposals would unduly restrict a significant portion of 
U.S.-registered foreign private issuers from terminating their Exchange 
Act registration and reporting obligations. We have carefully 
considered commenters' suggestions regarding the rule proposals, and 
have incorporated many of them into the rules that we are reproposing 
today.
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    \11\ These comments are available on the Commission's Web site 
at http://www.sec.gov/rules/proposed/s71205.shtml and in the 

Commission's Public Reference Room in its Washington, DC 
headquarters.
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    A number of commenters have noted that many non-U.S. securities 
markets impose relatively few restrictions on the ability of a foreign 
issuer to delist from those markets and to terminate all reporting and 
other compliance obligations in those markets.\12\ In the United 
States, foreign companies are generally able to delist their securities 
from exchanges without significant restrictions.\13\ However, although 
a foreign private issuer is able to delist its securities from U.S. 
exchanges, it may continue to have reporting obligations under the 
Exchange Act.
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    \12\ See, for example, the letter, dated February 9, 2004, from 
the Association Francaise Des Entreprises Privees (AFEP) and other 
European industry group representatives.
    \13\ See, for example, Exchange Act Rule 12d2-2 (17 CFR 
240.12d2-2) and section 806.02 of the New York Stock Exchange (NYSE) 
Listed Company Manual.
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    The rules we are reproposing today are intended to provide foreign 
private issuers with methods by which they can exit the U.S. public 
securities markets without significant burdens when U.S. market 
interest in the issuers' securities is relatively low. For foreign 
registrants of equity securities, that method would be based on a 
comparison of the average daily trading volume of its class of 
securities in the United States with that in its primary trading 
market.\14\ Although we expressed some reservation about relying solely 
on trading volume data as the basis for measuring U.S. regulatory 
interest in the Proposing Release, in light of the comments received, 
we are reconsidering our position. We believe that a standard based on 
trading volume may in fact be superior to the originally proposed 
standard, which was based primarily on a comparison of an issuer's U.S. 
public float with its worldwide public float, because it is a direct 
measure of the issuer's nexus with the U.S. market, and because trading 
volume data is easier to obtain than public float or record holder 
data. In applying an exit standard based on trading volume data for the 
U.S. and an issuer's primary trading market, issuers will face reduced 
costs when determining whether they can terminate their registration 
and reporting obligations under the Exchange Act, compared to the 
earlier proposed measures that would have required an issuer to assess 
the U.S. residence of its security holders.
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    \14\ As discussed in greater detail in Part II.A. of this 
release, a foreign private issuer would be eligible to deregister a 
class of equity securities under reproposed Rule 12h-6 if the 
average daily trading volume in the United States was no greater 
than 5% of its average daily trading volume in its primary trading 
market over a recent 12-month period.
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    We believe the reproposed rules appropriately provide meaningful 
protection of U.S. investors by permitting the termination of Exchange 
Act registration and reporting only by foreign registrants in whose 
U.S. registered securities relative U.S. market interest is low. We 
believe the proposed conditions governing eligibility to use the 
trading volume-based measure, along with the other proposed conditions 
concerning prior Exchange Act reporting, the prohibition against recent 
registered U.S. offerings, and required foreign listing should further 
serve to protect U.S. investors.
    We believe the reproposed rules will provide foreign private 
issuers, regardless of size, with the meaningful option of terminating 
their Exchange Act reporting obligations when, after electing to access 
the U.S. public capital markets, they find that there is relatively 
little U.S. investor interest in their U.S.-registered securities. As a 
result, foreign private issuers should be more willing initially to 
register their securities with the Commission, to the benefit of U.S. 
investors who will have more investment choices.

B. Overview of the Current Exchange Act Exit Rules

    Exchange Act Rule 12g-4 currently governs whether an issuer may 
terminate its registration of a class of securities under section 12(g) 
of the Exchange Act \15\ and its corresponding section 13(a) reporting 
obligations.\16\ Under this rule, a foreign private issuer may seek 
termination of its registration of a class of securities under section 
12(g) by certifying in Form 15 \17\ that the subject class of 
securities is held of record by less than 300 residents in the United 
States or by less than 500 U.S. residents when the issuer's total 
assets have not exceeded $10 million on the last day of each of the 
issuer's most recent three fiscal years.\18\ To determine

[[Page 1386]]

the number of U.S. resident shareholders under this rule, a foreign 
private issuer must use the method of counting provided under Exchange 
Act Rule 12g3-2(a).\19\ This method requires looking through the record 
ownership of brokers, dealers, banks, depositaries or other nominees on 
a worldwide basis and counting the number of separate accounts of 
customers resident in the United States for which the securities are 
held.\20\ Under this rule, issuers are required to make inquiries of 
all nominees, wherever located and wherever in the chain of ownership, 
for the purpose of assessing the number of U.S. resident holders.
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    \15\ This statutory section only applies to equity securities. 
See Exchange Act Section 12(g)(1) [15 U.S.C. 78l (g)(1)]. An issuer 
may register a class of equity securities under section 12(g) either 
voluntarily or because it had 500 or more security holders of record 
and more than $10 million in total assets and, if a foreign private 
issuer, more than 300 shareholders resident in the United States on 
the last day of its most recently completed fiscal year. See 
Exchange Act Rules 12g-1 (17 CFR 12g-1) and 12g3-2(a) (17 CFR 
240.12g3-2(a)). However, a foreign private issuer may avoid an 
Exchange Act registration obligation under section 12(g) by 
establishing the exemption under Exchange Act Rule 12g3-2(b) (17 CFR 
240.12g3-2(b)).
    \16\ 15 U.S.C. 78m(a).
    \17\ 17 CFR 249.323.
    \18\ Exchange Act Rule 12g-4(a)(2) (17 CFR 240.12g-4(a)(2)). 
Alternatively, a foreign private issuer may seek to terminate its 
section 12(g) registration under the Rule 12g-4 provision that 
applies to any issuer, whether domestic or foreign. Under this 
provision, an issuer must certify on Form 15 that its class of 
equity securities is held of record on a worldwide basis by less 
than 300 persons or by less than 500 persons when the issuer's total 
assets have not exceeded $10 million on the last day of each of the 
issuer's most recent three fiscal years. Exchange Act Rule 12g-
4(a)(1) (17 CFR 240.12g-4(a)(1)).
    \19\ 17 CFR 240.12g3-2(a).
    \20\ See 17 CFR 240.12g3-2(a)(1).
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    Rule 12h-3 \21\ is the Exchange Act rule governing when an issuer 
may suspend its reporting obligations under section 15(d).\22\ While 
Rule 12h-3's standards are substantially similar to those under Rule 
12g-4,\23\ there are two important differences. First, an issuer may 
generally not suspend its section 15(d) reporting obligations until it 
has filed one Exchange Act annual report after the offering in 
question. Second, an issuer cannot terminate its reporting obligations 
under section 15(d) but can only suspend those obligations.\24\ 
Therefore, for as long as the subject class of securities is 
outstanding, a foreign private issuer must also determine at the end of 
each fiscal year whether the number of U.S. resident security holders 
or total number of record holders has increased enough to trigger anew 
its section 15(d) reporting obligations.
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    \21\ 17 CFR 240.12h-3.
    \22\ The effectiveness of a registration statement under the 
Securities Act of 1933 (Securities Act) triggers Section 15(d) 
reporting obligations. That section provides that an issuer cannot 
suspend its reporting obligations unless the subject class of 
securities is held of record by less than 300 persons at the 
beginning of a fiscal year other than the year in which the 
Securities Act registration statement became effective.
    \23\ See, in particular, Rule 12h-3(b)(2) (17 CFR 240.12h-
3(b)(2)). This provision imposes not only the same record holder 
standards as under Rule 12g-4 but also the same counting method 
required under Rule 12g3-2(a).
    \24\ Exchange Act Rule 12h-3(e) (17 CFR 240.12h-3(e)).
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    An issuer may be subject to Exchange Act reporting obligations 
under more than one statutory section or rule. While an issuer is 
deemed to have only one active set of reporting obligations, when an 
issuer attempts to exit the Exchange Act reporting system, it must 
consider whether there are any dormant or suspended reporting 
obligations that would preclude the issuer from ceasing its Exchange 
Act reporting.
    For example, an issuer may have active section 13(a) reporting 
obligations because it has a class of equity or debt securities listed 
on a national securities exchange and registered with the Commission 
under section 12(b) of the Exchange Act.\25\ When attempting to exit 
the Exchange Act reporting system, the registrant not only must take 
steps to effect its delisting from the national securities 
exchange,\26\ but also must consider whether it has any dormant or 
suspended reporting obligations under section 12(g) or 15(d) \27\ that 
will become operative once its section 12(b) registration ceases.\28\
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    \25\ 15 U.S.C. 78l(b).
    \26\ To effect the delisting and subsequent termination of an 
issuer's registration of a class of securities under section 12(b), 
the national securities exchange or issuer must file a Form 25 (17 
CFR 249.25) with the Commission pursuant to Exchange Act Rule 12d2-2 
(17 CFR 240.12d2-2). We have adopted amendments to our rules and 
Form 25 to streamline the procedures for removing from listing, and 
withdrawing from registration, securities under section 12(b). See 
Release No. 34-52029 (July 14, 2005), 70 FR 42456 (July 22, 2005).
    \27\ A registrant may have section 12(g) reporting obligations 
following its termination of registration of a class of equity 
securities under section 12(b): (1) If it initially registered the 
class of securities under section 12(g) before listing the 
securities on a national securities exchange; or (2) under Exchange 
Act Rule 12g-2 (17 CFR 240.12g-2). That rule provides that any class 
of securities that would have been required to be registered under 
section 12(g), except for the fact that it was listed and registered 
on a national securities exchange, is deemed to be registered under 
section 12(g) upon the termination of registration under section 
12(b) as long as the class of securities are not exempt from 
registration under section 12 and are held of record by 300 or more 
persons. Exchange Act section 15(d) automatically suspends the duty 
to file reports under that section regarding securities registered 
under an effective Securities Act registration statement once the 
issuer has registered the class of securities under section 12 of 
the Exchange Act.
    \28\ Because compliance with Rule 12d2-2 does not depend on the 
number of an issuer's record holders, termination of registration 
under section 12(b) does not raise the same concerns for an issuer 
as under section 12(g) or 15(d). As is currently the case, under the 
rule amendments reproposed today, a foreign private issuer that has 
a class of securities registered under section 12(b) will have to 
comply with Rule 12d2-2 before it can effect termination of 
registration under section 12(g) or termination of its reporting 
obligations under section 13(a) or section 15(d). Moreover, as under 
the current Exchange Act exit regime, a foreign private issuer will 
have to file a post-effective amendment to terminate the 
registration of any unsold securities under an existing Securities 
Act registration statement before it can terminate its registration 
and reporting under Rule 12h-6.
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C. Concerns Regarding the Current Exchange Act Exit Rules

    It has been almost four decades since the Commission first adopted 
the ``300 U.S. resident shareholder'' standard as the benchmark for 
determining both when a foreign private issuer must register a class of 
equity securities under section 12(g) and when it may terminate that 
registration.\29\ Moreover, it has been over two decades since the 
Commission adopted Form 15 under Rules 12g-4 and 12h-3.\30\ Since then, 
market globalization, advances in information technology, the increased 
use of American Depositary Receipt (``ADR'') \31\ facilities by foreign 
companies to sell and list their securities in the United States, and 
other factors have increased significantly the number of foreign 
companies that have engaged in cross-border securities activities and 
sought listings in U.S. securities markets, as well as increased the 
amount of U.S. investor interest in the securities of foreign 
companies.
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    \29\ See Release No. 34-8066 (April 28, 1967).
    \30\ See Release No. 34-20784 (March 22, 1984), 49 FR 12688 
(March 30, 1984).
    \31\ An ADR is a negotiable instrument that represents an 
ownership interest in a specified number of securities, which the 
securities holder has deposited with a designated bank depositary. 
Use of an ADR facility makes it easier for a U.S. resident to 
collect dividends in U.S. dollars. Moreover, because the clearance 
and settlement process for ADRs generally is the same for securities 
of domestic companies that are traded in U.S. markets, a U.S. holder 
of an ADR is able to hold securities of a foreign company that 
trades, clears and settles within automated U.S. systems and within 
U.S. time periods.
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    Representatives of foreign companies and foreign industry 
associations have voiced their concerns that the ``300 U.S. resident 
shareholder'' standard has become outdated and too easily exceeded by a 
foreign company that may have engaged in very little recent selling 
activity in the United States.\32\ These representatives have further 
criticized the exit rules' reliance on the number of U.S. resident 
shareholders because, with the advent of book-entry recording,\33\ it 
is difficult and costly to arrive at an accurate count of a foreign 
company's U.S. resident shareholders. These representatives have also 
been critical of Rule 12h-3 because it merely suspends rather than 
terminates a company's section 15(d) reporting obligations. As such, 
years after filing a Form 15, a foreign company may find

[[Page 1387]]

that it has once again exceeded the 300 U.S. resident shareholder 
threshold, and thereupon again become subject to section 15(d) 
reporting duties, without regard to its U.S. market activity.\34\
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    \32\ See, for example, the letter from AFEP.
    \33\ The last three decades have seen the development of a U.S. 
clearance and settlement system that relies on electronic book-entry 
to settle securities transactions and transfer ownership rather than 
one dependent on the use of paper certificates. For an overview of 
this development, see Release No. 33-8398 (March 11, 2004), 69 FR 
12922 (March 18, 2004), the text surrounding n. 104. This movement 
to electronic book-entry clearance and settlement systems has taken 
place on a global basis as well, as both developed and developing 
securities markets have sought to improve efficiency.
    \34\ Similarly, as some commenters have noted, after terminating 
its registration regarding a class of securities under section 
12(g), with little or no effort on its part, a foreign private 
issuer may discover at the end of a subsequent fiscal year that it 
once again has more than 300 U.S. resident shareholders and, 
therefore, must register the class of securities anew under that 
section of the Exchange Act.
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    Finally, these representatives have objected to our current rule, 
which does not permit a foreign private issuer to obtain the Exchange 
Act Rule 12g3-2(b) exemption \35\ if, during the previous 18 months, it 
has had a class of securities registered under section 12 or a 
reporting obligation, suspended or active, under section 15(d) of the 
Exchange Act.\36\
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    \35\ Rule 12g3-2(b) provides an exemption from registration 
under section 12(g) with respect to a foreign private issuer that 
submits to the Commission, on a current basis, the home country 
materials required by the rule.
    \36\ Exchange Act Rule 12g3-2(d)(1) (17 CFR 12g3-2(d)(1)). This 
exception to the Rule 12g3-2(b) exemption does not apply to 
registered Securities Act offerings filed by Canadian companies on 
certain Multijurisdictional Disclosure System (``MJDS'') forms. The 
Rule 12g3-2(b) exemption is also not available for a foreign private 
issuer's securities issued to acquire by merger or similar 
transaction an issuer that had securities registered under section 
12 or a reporting obligation, suspended or active, under section 
15(d), except for a transaction registered on specified MJDS forms. 
See Exchange Act Rule 12g3-2(d)(2) (17 CFR 240.12g3-2(d)(2)).
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D. The Originally Proposed Rule Amendments

    In light of the changes to U.S. capital markets caused primarily by 
market globalization and advances in information technology, the 
Commission proposed to amend the rules allowing a foreign private 
issuer to exit the Exchange Act registration and reporting regime. We 
proposed to amend Rules 12g-4 and 12h-3 to eliminate the provisions 
that primarily condition a foreign private issuer's eligibility to 
cease its Exchange Act reporting obligations on whether the number of 
its U.S. resident security holders has fallen below the 300 or 500 
person threshold. In their place, we proposed new Exchange Act Rule 
12h-6 that would permit a foreign private issuer that meets the 
conditions discussed below to terminate:
     Its registration of a class of equity securities under 
section 12(g) and its resulting section 13(a) reporting obligations; 
and
     Its section 15(d) reporting obligations regarding a class 
of equity or debt securities.
    Under proposed Rule 12h-6, a foreign private issuer would have been 
eligible to terminate its Exchange Act reporting obligations regarding 
a class of equity securities if it met one of a set of alternative 
benchmarks, not based on a record holder count, and which depended on 
whether the issuer was a well-known seasoned issuer (``WKSI'').\37\ As 
proposed, a foreign private issuer could have terminated its Exchange 
Act registration and reporting obligations:
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    \37\ For purposes of proposed Rule 12h-6, a ``well-known 
seasoned issuer'' would have meant a well-known seasoned issuer as 
defined in Securities Act Rule 405 (17 CFR 230.405), which would 
have required the worldwide market value of an issuer's outstanding 
voting and non-voting common equity held by non-affiliates to be 
$700 million or more.
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     If a WKSI, as long as the U.S. average daily trading 
volume (``ADTV'') of the subject class of securities had been no 
greater than 5 percent of the ADTV of that class of securities in its 
primary trading market during a recent 12 month period, and U.S. 
residents held no more than 10 percent of the issuer's worldwide public 
float as of a specified date; or
     If a WKSI with greater than 5 percent U.S. ADTV, or if a 
non-WKSI, regardless of U.S. trading volume, U.S. residents held no 
more than 5 percent of the issuer's worldwide public float as of a 
specified date.\38\
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    \38\ If a foreign private issuer was unable to meet one of these 
proposed benchmarks, but satisfied the other conditions of the rule, 
it could still have terminated its Exchange Act registration and 
reporting obligations regarding a class of equity securities as long 
as that class of securities was held of record by less than 300 
persons on a worldwide basis or less than 300 persons resident in 
the United States as of a specified date. Proposed Rule 12h-6 also 
included a similar ``300 U.S. resident or worldwide holder'' 
standard for debt securities issuers.
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    Proposed Rule 12h-6 also would have imposed the following 
conditions on a foreign private issuer before it could terminate its 
registration and reporting obligations regarding a class of equity 
securities:
     The issuer must have been an Exchange Act reporting 
company for the past two years, have filed or furnished all reports 
required for this period, and have filed at least two annual reports 
under section 13(a);
     The issuer's securities must not have been sold in the 
United States in either a registered or unregistered offering under the 
Securities Act during the preceding 12 months except for a few 
specified exempt securities or exempt transactions; and
     For the preceding two years, the issuer must have 
maintained a listing of the subject class of securities on an exchange 
in its home country, as defined in Form 20-F,\39\ which constituted the 
primary trading market for the securities.
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    \39\ 17 CFR 249.220f. Form 20-F General Instruction F defines 
``home country'' as the jurisdiction in which the issuer is legally 
organized, incorporated or established and, if differnt, the 
jurisdiction where it has its principal listing.
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    Finally, we also proposed to:
     Streamline the counting method used to determine an 
issuer's U.S. public float or the number of its U.S. shareholders by 
permitting the look-through to be limited to the United States, the 
issuer's jurisdication, and, if different, the jurisdiction of its 
primary trading market;
     Permit issuers to rely on the assistance of an independent 
information services provider when calculating the number of their U.S. 
resident holders; and
     Permit issuers to establish the Rule 12g3-2(b) exemption 
for a class of equity securities that was the subject of a Form 15F 
immediately upon termination of Exchange Act reporting, so long as the 
issuer publishes its home country materials electronically.

E. Principal Comments Regarding the Proposed Rule Amendments

    We received 54 comment letters in response to our proposals. These 
letters represented the views of over 80 distinct entities, including 
business and legal associations, foreign companies, depositary banks, 
stock exchanges and market operators, financial advisory and accounting 
firms, law firms, foreign governments, and academia. While most 
commenters supported the purpose and overall structure of the rule 
proposals, many also believed that the proposed rule amendments would 
be, like the existing rules, unnecessarily restrictive.
    We received the most comments concerning the proposed quantitative 
benchmarks that would enable a foreign private issuer of equity 
securities to exit the Exchange Act reporting regime regardless of the 
number of its U.S. resident shareholders. Numerous commenters urged the 
Commission to increase significantly the proposed benchmarks based on 
the calculation of the percentage of an issuer's worldwide public float 
held by U.S. residents. Several commenters also urged the Commission to 
adopt the same quantitative standards for smaller companies as for 
well-known seasoned issuers. Many commenters also suggested the 
adoption of a rule provision that would permit an issuer to exclude 
certain holders, such as qualified institutional buyers

[[Page 1388]]

(``QIBs''),\40\ from its U.S. public float percentage determination, as 
an alternative to adopting significantly raised quantitative 
benchmarks. Numerous commenters further favored significantly raising 
the alternative record holder threshold for equity securities issuers 
and the record holder standard for debt securities issuers.
---------------------------------------------------------------------------

    \40\ A QIB is an entity specified under Securities Act Rule 144A 
(17 CFR 230.144A) that in the aggregate owns at least $100 million 
in securities of issuers that are not affiliated with the entity.
---------------------------------------------------------------------------

    Other issues raised by commenters included their request:
     To extend termination of Exchange Act reporting under Rule 
12h-6 to prior Form 15 filers whose termination of registration or 
suspension of reporting became effective before the effective date of 
the new rule;
     To require a shorter prior reporting period for some or 
all classes of issuers;
     To permit an issuer that has succeeded to the Exchange Act 
reporting obligations of an acquired company under Exchange Act Rule 
12g-3 \41\ or Rule 15d-5 \42\ to take into account the reporting 
history of the acquired company for the purpose of meeting the prior 
reporting condition under Rule 12h-6;
---------------------------------------------------------------------------

    \41\ 17 CFR 240.12g-3.
    \42\ 17 CFR 240.15d-5.
---------------------------------------------------------------------------

     To exclude unregistered offerings from the one year 
dormancy condition;
     To permit an issuer to meet the listing condition 
requirement if at least 55 percent of the trading volume of the subject 
class of securities occurs in the aggregate in more than one non-U.S. 
market;
     To increase the 300 record holder standard, which is 
included in both the alternative record holder provision for equity 
securities issuers and the provision for debt securities issuers;
     To extend the Exchange Act Rule 12g3-2(b) exemption to 
prior Form 15 filers even if 18 months has not elapsed;
     To extend the Rule 12g3-2(b) exemption to successor 
issuers;
     To permit all issuers having the Rule 12g3-2(b) exemption 
to publish electronically on their Web sites their home country 
documents; and
     To amend Exchange Act Rule 12g3-2(a), which governs when a 
foreign private issuer enters the Exchange Act registration and 
reporting regime under section 12(g), so as to conform that rule to the 
amended exit thresholds under Rule 12h-6.

F. Summary of the Reproposed Rule Amendments

    We have addressed many of the commenters' concerns in the rules 
that we are reproposing today. Major revisions to the proposed rules 
include:
     Revising the quantitative benchmark provision for an 
issuer of equity securities by:
    [cir] Applying the same quantitative benchmark, which does not 
require a head count of security holders, to any issuer of equity 
securities, regardless of size;
    [cir] Permitting an issuer to terminate its Exchange Act 
registration and reporting obligations regarding a class of equity 
securities, assuming it meets all the other conditions of Rule 12h-6, 
if the U.S. ADTV of the subject class of securities has been no greater 
than 5 percent of the ADTV of that class of securities in the issuer's 
primary trading market during a recent 12 month period, regardless of 
the size of its U.S. public float;
    [cir] Requiring an issuer to wait 12 months before filing its Form 
15F \43\ in reliance on the trading volume standard if the issuer has 
delisted its class of equity securities from a national securities 
exchange or automated inter-dealer quotation system in the United 
States,\44\ and, at the time of delisting, the U.S. ADTV of the subject 
class of securities exceeded 5 percent of the ADTV of that class of 
securities in the issuer's primary trading market for the preceding 12 
months; and
---------------------------------------------------------------------------

    \43\ Like current Rules 12g-4 and 12h-3, which require the 
filing of Form 15, reproposed Rule 12h-6 would require the filing of 
a form--Form 15F--by which an issuer would certify that it meets the 
conditions for ceasing its Exchange Act reporting obligations.
    \44\ Neither the OTC Bulletin Board operated by the NASD nor the 
market operated by the Pink Sheets LLC are deemed to be automated 
inter-dealer quotation systems. See Release 33-6862 (April 23, 
1999), n.22.
---------------------------------------------------------------------------

    [cir] Further requiring an issuer to wait 12 months before filing 
its Form 15F in reliance on the trading volume standard if the issuer 
has terminated an American Depositary Receipts (ADR) facility;
     Shortening the prior reporting period required for an 
issuer of equity securities so that, under the reproposed rules, an 
issuer must have at least one year of Exchange Act reporting, must be 
current in reporting obligations for that period, and have filed at 
least one Exchange Act annual report;
     Permitting an issuer of equity securities during the one 
year dormancy period to sell unregistered securities exempted under the 
Securities Act, including securities sold in section 4(2) private 
placements,\45\ pursuant to Securities Act Rule 144A,\46\ under section 
3(a)(10) schemes of arrangement,\47\ and pursuant to Securities Act 
Rules 801 and 802; \48\
---------------------------------------------------------------------------

    \45\ 15 U.S.C. 77d(2).
    \46\ 17 CFR 230.144A.
    \47\ 15 U.S.C. 77c(a)(10).
    \48\ 17 CFR 230.801 and 230.802.
---------------------------------------------------------------------------

     Expanding the types of registered offerings that are 
excluded from the dormancy condition's prohibition against the sale of 
registered securities, so that, in addition to permitting registered 
securities sold to its employees or by selling shareholders in a non-
underwritten offering, an issuer may issue registered securities upon 
the exercise of outstanding rights that have been granted pro rata to 
all security holders, pursuant to a dividend or interest reinvestment 
plan, or upon the conversion of outstanding convertible securities;
     Revising the proposed home country listing condition for 
an issuer of equity securities by:
    [cir] Shortening the minimum period of required non-U.S. listing to 
one year;
    [cir] Permitting an issuer to have maintained that listing in a 
foreign jurisdiction that, either singly or together with one other 
foreign jurisdiction, constitutes the primary trading market for the 
issuer's subject class of securities;
    [cir] Revising the definition of ``primary trading market'' to mean 
that at least 55 percent of the trading in the foreign private issuer's 
subject class of securities took place in, on or through the facilities 
of a securities market or markets in no more than two foreign 
jurisdictions; and
    [cir] Requiring that, if an issuer aggregates the trading of its 
securities in two foreign jurisdictions for the purpose of Rule 12h-6, 
the trading market for the issuer's securities in at least one of the 
two foreign jurisdictions must be larger than the U.S. trading market 
for the issuer's securities;
     Revising the proposed counting method to apply only to an 
issuer's determination of its U.S. resident holders under the 
reproposed 300 record holder standard for equity and debt securities 
issuers, and to provide that an issuer that aggregates the trading 
volume of its securities in two foreign jurisdictions for the purpose 
of meeting the listing condition under Rule 12h-6 would have to look 
through nominee accounts in both foreign jurisdictions, which comprise 
its primary trading market, as well as in the United States and in its 
jurisdiction of incorporation if different from the two jurisdictions 
that comprise its primary trading market;
     Revising the proposed scope of Rule 12h-6 to extend 
termination of

[[Page 1389]]

Exchange Act reporting to a successor issuer that meets specified 
conditions;
     Revising the proposed scope of Rule 12h-6 to extend 
termination of Exchange Act reporting to a foreign private issuer that 
filed a Form 15 and thereafter suspended or terminated its Exchange Act 
reporting obligations before the effective date of Rule 12h-6, as long 
as:
    [cir] Since the effective date of its termination or suspension of 
reporting under Form 15, the issuer has not engaged in any transaction 
or triggered any threshold that, under the current rules, would require 
it to resume or assume anew Exchange Act reporting obligations;
    [cir] The issuer files a Form 15F; and
    [cir] If its Form 15 applied to a class of equity securities, the 
issuer has satisfied Rule 12h-6's ``primary trading market'' listing 
condition for that class of securities;
     Extending the Rule 12g3-2(b) exemption to a foreign 
private issuer, including a successor issuer, immediately upon its 
termination of reporting under Rule 12h-6;
     Extending the Rule 12g3-2(b) exemption to a foreign 
private issuer that previously filed a Form 15, and thereafter 
terminated or suspended its Exchange Act reporting obligations 
regarding a class of equity securities before the effective date of 
Rule 12h-6, immediately upon the effectiveness of its termination of 
reporting under Rule 12h-6; and
     Permitting a non-reporting company that has received or 
will receive the Rule 12g3-2(b) exemption, upon application to the 
Commission and not pursuant to Rule 12h-6, to publish its ``ongoing'' 
home country documents required under Rule 12g3-2(b)(1)(iii) \49\ on 
its Internet Web site rather than submitting them in paper to the 
Commission.
---------------------------------------------------------------------------

    \49\ 17 CFR 240.12g3-2(b)(1)(iii).
---------------------------------------------------------------------------

    We are reproposing other proposed provisions with little to no 
change. These provisions include:
     The alternative record holder provision for equity issuers 
and the provision for debt securities issuers, both of which retain the 
current 300 record holder standard, as proposed;
     The provision permitting an issuer of equity or debt 
securities to rely on the assistance of an independent information 
services provider when calculating the number of its U.S. resident 
security holders;
     The requirement that a foreign private issuer publish a 
notice, such as a press release, which announces its intention to 
terminate its Exchange Act reporting obligations, except that instead 
of the proposed requirement that the notice be published at least 15 
business days before the filing of the Form 15F, we are reproposing to 
require that an issuer publish the notice before or at the time of 
filing of the Form 15F;
     The automatic suspension of an issuer's Exchange Act 
reporting obligations upon the filing of its Form 15F followed by a 90-
day waiting period at the end of which, assuming the Commission has no 
objections, the suspension becomes a termination of reporting;
     The form and content of Form 15F, except that we have 
modified proposed Form 15F to conform to the changes to the proposed 
rule amendments that we are reproposing today; and
     The electronic furnishing of home country information on 
the Internet Web site of an issuer that has obtained the Rule 12g3-2(b) 
exemption upon the termination of its Exchange Act reporting 
obligations under Rule 12h-6.
    We believe the rules we are reproposing today are consistent with 
the protection of U.S. investors. These rules would establish a new 
benchmark that reflects the balancing of potential benefits to U.S. 
investors, in the form of increased investment opportunities in foreign 
private companies listing in the United States, and the potential loss 
of the full protections of the Exchange Act for U.S. investors in 
foreign private issuers that elect to terminate their Exchange Act 
registration and reporting under reproposed Rule 12h-6. Compared to the 
current exit rules, the reproposed rule amendments would establish a 
more clearly defined process with more appropriate benchmarks by which 
a foreign private issuer can terminate its Exchange Act reporting 
obligations if, after a period of time, U.S. market interest is not 
significant relative to non-U.S. market interest. As a result, we 
believe foreign private issuers should be more willing initially to 
register their securities with the Commission, to the benefit of 
investors.
    At the same time, we believe the conditions that determine a 
foreign private issuer's eligibility to terminate its Exchange Act 
registration and reporting under reproposed Rule 12h-6 will serve to 
protect U.S. investors. For example, the prior reporting condition is 
intended to provide investors with at least one complete year's worth 
of Exchange Act reports, including an annual report, upon which they 
can base their investment decisions about a particular foreign 
registrant before it exits the Exchange Act reporting system. The 
dormancy condition is designed to deter a foreign private issuer's 
promotion of U.S. investor interest through recent registered capital-
raising before exiting our reporting system. The foreign listing 
condition and U.S. trading volume benchmark support our view that, 
before a foreign private issuer may terminate its Exchange Act 
reporting obligations under Rule 12h-6, it must be subject to an 
ongoing disclosure and financial reporting regime, and have a 
significant market following, in its home market. The condition 
restricting the ability of an issuer to rely on the trading volume 
standard under specified circumstances should deter an issuer from 
excluding U.S. investors, particularly retail investors, from investing 
in their securities when U.S. market interest is still significant. The 
immediate availability of the exemption under Rule 12g3-2(b) would 
foster access by U.S. investors to ongoing home country information 
about an issuer after it terminates its Exchange Act registration and 
reporting under Rule 12h-6. Finally, the conditions relating to the 
filing of Form 15F and the publication of a press release or other 
notice would promote transparency in the exit process.

II. Discussion

A. Conditions for Equity Securities Issuers

1. Quantitative Benchmarks
    a. Non-Record Holder Benchmark
    As reproposed, Rule 12h-6 would enable a foreign private issuer, 
regardless of size, to qualify for termination of its Exchange Act 
reporting by meeting a quantitative benchmark provision that does not 
depend on the number of its U.S. record holders or the percentage of 
its securities held by those holders. Specifically, an issuer would be 
able to terminate its Exchange Act registration and reporting 
obligations regarding a class of equity securities, assuming it meets 
the other conditions of Rule 12h-6, if the ADTV of the subject class of 
equity securities in the United States has been 5 percent or less of 
the ADTV of that class of securities in the issuer's primary trading 
market during a recent 12-month period.\50\
---------------------------------------------------------------------------

    \50\ Reproposed Rule 12h-6(a)(4)(i). When calculating its U.S. 
ADTV, an issuer would have to take into account all U.S. trading of 
its subject securities, whether occurring on a registered national 
securities exchange or elsewhere, as reported through the U.S. 
transaction reporting plan. It would then divide its U.S. ADTV by 
the ADTV in the one or two jurisdictions that comprise its primary 
trading market. For a discussion of how an issuer would make its 
primary trading market determination under reproposed Rule 12h-6, 
see Part II.A.4. of this release.

---------------------------------------------------------------------------

[[Page 1390]]

    Although numerous commenters supported the adoption of a 
quantitative benchmark that is not based on the number of an issuer's 
U.S. shareholders, many commenters expressed concern that, based on 
their projections, too few existing reporting foreign private issuers 
would be eligible to terminate their Exchange Act registration and 
reporting obligations under the proposed benchmarks.\51\ The proposed 
benchmarks were based either on a combination of U.S. public float and 
trading volume criteria or solely on U.S. public float data. According 
to these commenters, the proposed rules, if adopted, would continue to 
discourage foreign companies from entering U.S. public capital 
markets.\52\
---------------------------------------------------------------------------

    \51\ See, for example, the letter of Sullivan & Cromwell.
    \52\ See, for example, the letter, dated February 28, 2006, of 
Cleary Gottlieb Steen & Hamilton LLP (``Cleary Gottlieb letter'').
---------------------------------------------------------------------------

    While many commenters supported significantly increasing the 
proposed U.S. shareholder standard to a 25 percent threshold,\53\ there 
was less agreement on whether a particular class of security holders 
should be included when making the U.S. public float determination. 
Some commenters suggested the possible exclusion of a number of classes 
of investors, such as qualified institutional buyers (``QIBs''), the 
top five or ten U.S. shareholders of an issuer's equity securities, and 
U.S. shareholders owning more than a specified amount (for example, $10 
million) of an issuer's equity securities.\54\ Others supported the 
inclusion of all U.S. investors, regardless of type.\55\
---------------------------------------------------------------------------

    \53\ See the letter from the European Commission, the letter, 
dated February 28, 2006, from the European Association for Listed 
Companies and other designated associations of publicly traded 
European companies (``EALIC''), and the letters from the American 
Bar Association, Section of Business Law (``ABA (Business)''), 
Linklaters, Cleary Gottlieb, and Cravath, Swaine and Moore 
(``Cravath'').
    \54\ See, for example, the letters from the European Commission, 
EALIC and Cleary Gottlieb.
    \55\ See the letters from the New York Stock Exchange and 
Galileo Global Advisors.
---------------------------------------------------------------------------

    Another commenter supported a quantitative benchmark based solely 
on trading volume criteria because that would best indicate the impact 
of U.S. deregistration on the broader market for the foreign issuer's 
securities.\56\ Although we initially did not propose such an approach, 
after reconsideration, we now believe that a new quantitative benchmark 
based solely on trading volume may more efficiently further the 
purposes of this rulemaking.
---------------------------------------------------------------------------

    \56\ See the letter from Fried, Frank, Harris, Shriver & 
Jacobson. Earlier letters from EALIC and Cleary Gottlieb, dated 
February 9, 2004, suggested a similar approach.
---------------------------------------------------------------------------

    One advantage to a benchmark based solely on trading volume is that 
it is a fairly direct measure of U.S. market interest in a foreign 
private issuer's securities at a particular time. Another factor in 
favor of a trading volume only benchmark is that trading volume data 
for the U.S. and an issuer's primary market is easier to obtain and 
confirm than is the data required for a U.S. public float or record 
holder determination. As commenters have noted, it is difficult for a 
reporting foreign private issuer to determine accurately the specific 
identities of its U.S. investors.\57\ A public float benchmark would 
require such a determination to varying degrees, particularly if 
classes of investors are excluded. As a result, the reproposed 
benchmark, based solely on trading volume, should result in reduced 
costs to issuers in determining whether they can terminate their 
Exchange Act reporting obligations.
---------------------------------------------------------------------------

    \57\ See, for example, the letter, dated March 18, 2005, from 
Cleary Gottlieb.
---------------------------------------------------------------------------

    Various markets may measure and report trading volume differently. 
For example, dealer interpositioning in dealer markets may result in a 
higher reported volume in securities transactions. In our other rules 
that use ADTV as a measure, however, we have not found it necessary or 
appropriate to make distinctions based on the type of market on which a 
security is traded for purposes of determining ADTV.\58\ Nonetheless, 
as noted below, we seek comment as to whether Rule 12h-6 should take 
into account in some fashion the fact that ADTV may not be measured 
uniformly across trading markets.
---------------------------------------------------------------------------

    \58\ See Regulation M, 17 CFR 242.100-105, and Release No. 33-
7375 (December 20, 1996).
---------------------------------------------------------------------------

    Reproposed Rule 12h-6 does not mandate or expressly specify 
acceptable information sources for determining ADTV. This is consistent 
with other rules that use ADTV as a measure.\59\ Issuers should have 
flexibility in determining the ADTV of their securities in the 
appropriate markets from information that is generally widely available 
from a number of reliable sources. Nonetheless, as noted below, we seek 
comment as to whether Rule 12h-6 should specify one or more acceptable 
sources of ADTV information.
---------------------------------------------------------------------------

    \59\ See, for example, the definition of ADTV in Regulation M at 
17 CFR 242.100.
---------------------------------------------------------------------------

    As originally proposed, Rule 12h-6 would have established different 
deregistration thresholds for well-known seasoned issuers (``WKSIs''). 
Many commenters opposed having different standards for WKSIs and 
smaller companies. Those commenters maintained that smaller companies 
should benefit from the full range of options available to WKSIs under 
the new rule since the costs of Exchange Act reporting generally are 
disproportionately greater for smaller companies than for larger 
companies.\60\ These comments have persuaded us to propose the same 
trading volume standard for smaller issuers as for larger issuers. 
Having the same benchmark for any foreign private issuer of equity 
securities, regardless of size, should add increased flexibility and 
simplification to the Exchange Act deregistration regime.\61\ Moreover, 
setting the percentage of U.S. trading volume at a low level, at 5% of 
trading volume in the primary market, would serve to protect U.S. 
investors.
---------------------------------------------------------------------------

    \60\ See the letters from the European Commission, 
PricewaterhouseCoopers and Cleary Gottlieb.
    \61\ In the Proposing Release, in support of separate standards 
for WKSIs and non-WKSIs, we noted that there typically is a greater 
flow of information about a WKSI, both from the issuer and its 
analysts, than about a smaller company, and that this flow of 
information is more likely to continue after the WKSI's termination 
of reporting. After considering the numerous comments opposing a 
rule based on WKSI status, we are of the view that the proposed 
rules, if adopted, could well discourage smaller foreign companies 
from entering U.S. public capital markets, to the detriment of U.S. 
investors. In addition, we note that both smaller and larger 
companies will have to publish their material home country documents 
on their Internet Web sites as a condition to maintaining the Rule 
12g3-2(b) exemption received upon termination of reporting under 
Rule 12h-6.
---------------------------------------------------------------------------

    i. One Year Ineligibility Period After Delisting
    Because the principal quantitative measure under proposed Rule 12h-
6 would be based on a comparison of the trading volume in the United 
States and in one or two foreign markets of a foreign private issuer's 
equity securities, the rule should be structured so as not to create an 
incentive for a foreign private issuer to delist its securities from a 
U.S. exchange for the purpose of decreasing its U.S. trading volume. 
Indeed, as one commenter suggested, if we were to adopt a measure based 
solely on trading volume, a foreign private issuer that delisted its 
securities from a U.S. exchange before its trading volume fell below 
the applicable percentage should not be eligible to terminate its 
registration under such a standard.\62\
---------------------------------------------------------------------------

    \62\ See the letter, dated February 9, 2004, from Cleary 
Gottlieb.
---------------------------------------------------------------------------

    Companies should not be unnecessarily restricted in choosing the 
markets in which they wish their securities to trade. As a result, we 
do not believe that delisting from a U.S. exchange should result in a 
bar against

[[Page 1391]]

a foreign private issuer from using the reproposed rule. Nonetheless, 
we share the concern about a possible negative impact stemming from a 
measure based solely on trading volume. In addition, by requiring 
companies to remain registered and reporting under the Exchange Act for 
a period of time after delisting when, before delisting, the company 
had a relatively active U.S. market for its securities, U.S. investors 
will have access to information prepared in accordance with the 
Commission's financial reporting and disclosure requirements for a 
period of time during which, most likely, the U.S. market will be 
diminishing.
    To address these concerns, we are proposing, as a condition to the 
use of the trading volume standard of Rule 12h-6 and corresponding 
eligibility to file Form 15F, that if a foreign private issuer has had 
its equity securities delisted from a registered national securities 
exchange or automated inter-dealer quotation system within one year 
before filing the Form 15F, it must have satisfied the trading volume 
percentage as of the date of delisting, and as measured over the 12 
months preceding the date of delisting. Under this proposed condition:
     A listed foreign private issuer that satisfied the trading 
volume condition would be able to delist from its stock exchange and 
terminate its Exchange Act registration and reporting obligations 
concurrently; and
     A listed foreign private issuer that did not satisfy the 
trading volume condition would be able to delist but would not be 
eligible to file a Form 15F and terminate its Exchange Act registration 
and reporting obligations until one year after the date of delisting, 
assuming that, at the date of filing its Form 15F, its U.S. ADTV for 
the recent 12 month period subsequent to its delisting did not exceed 
5% of the ADTV in the issuer's primary trading market.\63\
---------------------------------------------------------------------------

    \63\ Proposed Note 1 to paragraph (a)(4) of reproposed Rule 12h-
6. An issuer that failed to meet the trading volume standard at the 
date of delisting would have to meet the trading volume standard one 
year later when filing its Form 15F. If, notwithstanding its 
delisting, an active U.S. over-the-counter market in the company's 
securities continued, the company would not be eligible to use 
proposed Rule 12h-6 and file a Form 15F in reliance on the trading 
volume benchmark.
---------------------------------------------------------------------------

    ii. One Year Ineligibility Period After Termination of ADR Facility
    Many foreign issuers have their securities trade in the United 
States in the form of American Depositary Receipts (``ADRs''). It 
appears that the current rules relating to termination of Exchange Act 
reporting by foreign private issuers may, as an unintended consequence, 
encourage foreign private issuers to terminate their ADR facilities as 
they seek to have fewer than 300 U.S. resident holders of their 
securities.\64\ When an issuer terminates its ADR facility, the holders 
of ADRs generally have the option to make arrangements to hold the 
underlying securities directly. However, if holders are unable or 
unwilling to make these arrangements, or to pay the costs associated 
with these arrangements, the holders will have their investment cashed 
out, that is, the underlying securities will generally be sold into the 
home market and the net proceeds (after deducting fees and expenses of 
the selling broker and the depositary bank) remitted to the former ADR 
holders.
---------------------------------------------------------------------------

    \64\ One ADR depositary bank commented that it has recently been 
involved in at least a dozen ADR facility terminations for this 
purpose, which have eliminated thousands of U.S. retail holders. See 
the letter from the Bank of New York.
---------------------------------------------------------------------------

    We believe foreign issuers should be encouraged to maintain their 
ADR facilities, even when they delist from a U.S. market and terminate 
their Exchange Act reporting obligations. After a foreign issuer 
delists and deregisters, its ADRs should continue to be able to be 
traded in the over-the-counter market in the United States. The 
termination of ADR facilities has a detrimental impact on holders, 
imposing fees and other charges on investors and, when investors are 
cashed out, subjecting investors to unplanned tax consequences. In 
addition, the termination of ADR facilities will effectively limit the 
ability of many U.S. investors to purchase the securities of the 
subject foreign company.
    To address these concerns, we are proposing, as a condition to the 
use of Rule 12h-6 and eligibility to file Form 15F in reliance on the 
trading volume provision, that a foreign private issuer shall not have 
terminated any sponsored ADR facility within the 12-month period before 
filing the Form 15F.
Comment Solicited
    We solicit comment on the proposed trading volume benchmark and on 
the proposed conditions restricting its use:
     Is the proposed trading volume benchmark an appropriate 
measure of the relative U.S. market interest in a foreign private 
issuer's securities?
     We assume that U.S. trading volume numbers reflect U.S. 
investor interest and U.S. resident trading activity in a security. We 
request data on the accuracy of these assumptions.
     Would the proposed trading volume benchmark provide 
adequate U.S. investor protection, particularly of retail investors?
     Would the proposed trading volume benchmark affect the OTC 
trading in the securities of foreign issuers? If so, how so? Would 
investors in those OTC securities be adequately protected by the 
proposed trading volume benchmark?
     Is the proposed trading volume benchmark preferable to the 
originally proposed benchmarks that were based either, if a WKSI, on a 
combination of trading volume and public float criteria, or solely on 
public float criteria?
     If the proposed trading volume threshold is preferable, is 
the threshold set at the appropriate level (5%)? Should it be set, 
instead, at a lower level, for example, 3% or 1%, or a higher level, 
for example, 7% or 10%? \65\
---------------------------------------------------------------------------

    \65\ We encourage commenters to provide appropriate economic 
support for any suggested change in the reproposed trading volume 
benchmark.
---------------------------------------------------------------------------

     Should the proposed trading volume benchmark require the 
measurement of the issuer's ADTV over a recent 12 month period, as 
proposed? Should it be measured over a shorter period, say, 6 months, 3 
months, or two months, or over a longer period, for example, 18 months 
or 24 months? Would a longer or shorter period be more or less 
susceptible to manipulation or other distorting effects regarding 
certain transactions?
     Should the proposed trading volume benchmark require an 
issuer to measure U.S. trading volume as a percentage of its worldwide 
trading volume, rather than as a percentage of the trading volume in 
its primary market, as proposed? If so, should an issuer only have to 
obtain trading volume data from foreign jurisdictions in which it has 
listed its securities in addition to the United States? If the proposed 
benchmark should measure U.S. trading volume as a percentage of 
worldwide trading volume, should we reduce the threshold, for example, 
to 3% or 1%, to take account that some issuers may be listed or traded 
in several markets?
     Are there difficulties associated with determining trading 
volume in the United States or foreign markets for purposes of 
reproposed Rule 12h-6? How should the rule deal with any such 
difficulties?
     Should the U.S. ADTV component of the proposed trading 
volume benchmark include all U.S. trading in the subject class of 
securities, whether listed or over-the-counter, as proposed?
     Should the proposed trading volume benchmark require an 
issuer to

[[Page 1392]]

obtain trading volume data from particular sources? Should the 
reproposed rule instead provide safe harbor procedures regarding 
sources that an issuer may use, but would not be required to use, to 
obtain trading volume data? If so, what are those procedures or 
sources?
     Should the proposed trading volume benchmark require an 
issuer to account for differences in calculating trading volume between 
different types of markets? If so, how should such differences be taken 
into account?
     Should one trading volume standard apply to all issuers, 
regardless of size, as proposed? Should we instead adopt different 
trading volume standards depending, for example, on the size of the 
issuer's U.S. public float?
     Would it be more appropriate to adopt an absolute trading 
volume measure that would require an issuer's U.S. trading volume not 
to have exceeded a specified amount for a 12-month period? If so, what 
should be the specified amount? What factors should determine that 
amount?
     Would the proposed trading volume benchmark create any 
unanticipated incentives in foreign private issuers that are 
undesirable? For example, is there a potential for manipulation in the 
calculation of average trading volume under reproposed Rule 12h-6? If 
so, how should we address it?
     What are the approximate costs that an issuer is expected 
to incur when determining whether it meets the proposed trading volume 
threshold? Are these costs lower or higher than the costs that an 
issuer would incur under the originally proposed benchmarks?
     Should we adopt the originally proposed benchmarks 
instead?
     Should we instead adopt a benchmark or benchmarks that use 
public float criteria, with or without a trading volume component, but 
that are set at a higher level than the originally proposed public 
float benchmarks? For example, should we adopt a standard that permits 
deregistration if an issuer's U.S. public float is no greater than 15%, 
20%, or 25% of its worldwide public float? Should the issuer's status 
as a WKSI be a factor?
     Is it appropriate to require an issuer to wait one year 
before being eligible to rely on Rule 12h-6's trading volume standard 
after delisting its securities from a U.S. stock market when, at the 
time of the delisting, the issuer did not satisfy the trading volume 
condition, as proposed?
     If so, should we adopt a one-year ineligibility period, as 
proposed? Should the period be more than one year, for example, 15, 18 
or 24 months? Should it be shorter than one year, for example, six or 
nine months?
     Should we apply the proposed one-year ineligibility period 
relating to delisting to issuers that delisted before the effective 
date of Rule 12h-6? If not, what type of relief should be provided to 
those issuers?
     Is it appropriate to require an issuer to wait one year 
before being eligible to use proposed Rule 12h-6 after terminating its 
ADR facility?
     If so, should we adopt a one year ineligibility period, as 
proposed? Should the period be more than one year, for example, 15, 18 
or 24 months? Should it be shorter than one year, for example, six or 
nine months?
     Should the one year ineligibility condition apply only 
when, at the date of termination of its ADR facility, the ADTV of the 
issuer's U.S. market exceeded 5% of the ADTV in its primary trading 
market for the preceding 12 months?
     Should we adopt a condition requiring an issuer to 
maintain a sponsored ADR facility for a certain period of time 
following its deregistration under Rule 12h-6? If so, should the period 
be six months, more than six months, for example, three months, or 
longer than six months, for example, a year following deregistration?
     Should we apply the proposed condition relating to the 
termination of an ADR facility to issuers that terminated their ADR 
facilities before the effective date of Rule 12h-6? If not, what type 
of relief should be provided to those issuers?
    b. Alternative 300 Holder Condition
    As an alternative to the proposed trading volume benchmark 
provision, reproposed Rule 12h-6 would permit a foreign private issuer 
to terminate its Exchange Act reporting obligations regarding a class 
of equity securities if it has less than 300 record holders on a 
worldwide basis or who are U.S. residents as long as the issuer meets 
the rule's other conditions.\66\ The purpose of this alternative 300 
holder condition is to enable an issuer to terminate its Exchange Act 
reporting obligations if it cannot satisfy the new trading volume 
benchmark but does meet the current 300 holder standard. Otherwise, an 
issuer could find itself worse off under Rule 12h-6 than under the 
current exit rules.\67\
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    \66\ Proposed Rule 12h-6(a)(4)(ii).
    \67\ The reproposed alternative record holder condition is 
substantially the same as the proposed condition. We did not 
originally propose, and we are not now proposing, a similar 500 
record holder condition, although one exists in the current rules 
for a small issuer with total assets that have not exceeded $10 
million for its most recent three fiscal years. Based on current 
experience, we believe foreign private issuers seldom use the 
current standard.
---------------------------------------------------------------------------

    While numerous commenters supported having an alternative record 
holder condition, most requested that the Commission significantly 
raise the 300 holder threshold.\68\ Many supported an increase to 3,000 
while others requested an increase to 500 or 1,000. Some commenters 
also requested that the Commission raise the record holder ``entrance'' 
threshold in Rule 12g3-2(a) to conform to any record holder increase in 
the new exit rule.
---------------------------------------------------------------------------

    \68\ See, for example, the letters from Cleary Gottlieb and 
Linklaters.
---------------------------------------------------------------------------

    We are not proposing to increase the 300 holder threshold for 
foreign private issuers either in the exit or entrance rules at this 
time. We understand that, due to the increased internationalization of 
the U.S. securities markets in recent decades, the 300 holder standard 
may not reflect current market conditions and, therefore, may require 
updating. However, the principal purpose for retaining the 300 holder 
provision is to preclude disadvantaging those companies that could 
terminate their Exchange Act reporting obligations under the current 
exit rules but not under the proposed trading volume condition. In 
addition, since domestic registrants are subject to a substantially 
similar record holder standard, we believe any change would be more 
appropriately considered as part of a comprehensive evaluation of the 
record holder provisions in both the Exchange Act entrance and exit 
rules for both domestic and foreign registrants.\69\
Comment Solicited
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    \69\ In this regard, we note that the Advisory Committee on 
Smaller Public Companies has made recommendations relating to 
Exchange Act registration and termination of registration. See the 
Final Report of the Advisory Committee on Smaller Public Companies, 
dated April 23, 2006, which is available at http://www.sec.gov/ 

info/ smallbus/acspc/acspc-finalreport.pdf.
---------------------------------------------------------------------------

    We solicit comment on the reproposed alternative 300 holder 
condition:
     Would it be appropriate to adopt a 300 holder standard as 
an alternative to the proposed trading volume standard, as reproposed?
     Should we require an issuer to wait one year after 
terminating its ADR facility or after delisting before being eligible 
to rely on the 300 holder condition, as we have proposed for the 
trading volume standard?
     Does the adoption of the proposed trading volume benchmark 
obviate the need to increase the 300 holder standard under reproposed 
Rule 12h-6?

[[Page 1393]]

2. Prior Exchange Act Reporting Condition
    We are reproposing a prior Exchange Act reporting condition that a 
foreign private issuer must meet before it can terminate its section 
12(g) registration or its section 15(d) reporting obligations regarding 
a class of equity securities under Rule 12h-6.\70\ This condition would 
require an issuer of equity securities to have had reporting 
obligations under section 13(a) or section 15(d) of the Exchange Act 
for at least the 12 months preceding the filing of Form 15F, to have 
filed or furnished all reports required for this period, and to have 
filed at least one annual report pursuant to section 13(a) of the 
Exchange Act. The purpose of this prior Exchange Act reporting 
condition is to provide investors in U.S. securities markets with a 
minimum period of time to make investment decisions regarding a foreign 
private issuer's securities based on the information provided in an 
Exchange Act annual report and the interim home country materials 
furnished in English under cover of Form 6-K.\71\
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    \70\ Reproposed Rule 12h-6(a)(1).
    \71\ Under cover of a Form 6-K (17 CFR 249.306), a foreign 
private issuer is required to furnish in English a copy of any 
document that it publishes or is required to publish under the laws 
of its home country or the requirements of its local exchange or 
that it has distributed to shareholders, and which is material to an 
investment decision.
---------------------------------------------------------------------------

    Originally proposed Rule 12h-6 would have required a foreign 
private issuer to have had Exchange Act reporting obligations for the 
two years preceding the filing of its Form 15F and to have filed at 
least two Exchange Act annual reports before it could terminate its 
Exchange Act reporting obligations regarding a class of equity 
securities. Several commenters objected to this two year reporting 
condition on the grounds that it would impose a stricter reporting 
requirement than is the case under the current exit rules.\72\ Some 
noted that section 15(d) and Rule 12h-3 only require at a minimum the 
filing of one Exchange Act annual report. Others stated that there is 
no mandatory minimum reporting requirement under section 12(g) and Rule 
12g-4.\73\
---------------------------------------------------------------------------

    \72\ See the letters from Simpson Thacher & Bartlett and the New 
York State Bar Association.
    \73\ See the letter from Skadden, Arps, Slate, Meagher & Flom.
---------------------------------------------------------------------------

    Still other commenters opposed a prior reporting condition that 
required an issuer to have furnished all Form 6-K reports required 
during the applicable period. Those commenters stated that this 
requirement would make the rule unavailable if a foreign private issuer 
did not submit a single required Form 6-K report during the period 
because it was unsure of the underlying home country document's 
materiality.\74\
---------------------------------------------------------------------------

    \74\ See the letter from Cleary Gottlieb.
---------------------------------------------------------------------------

    In order to prevent the rule from imposing a significantly greater 
burden on a foreign private issuer than the current exit regime, we 
propose to reduce the required prior reporting period to at least 12 
months and require only one Exchange Act annual report. However, the 
reproposed rule would also require a foreign private issuer to have 
submitted all Form 6-Ks required during the 12 months preceding the 
filing of its Form 15F in order to be eligible to terminate its 
reporting obligations regarding a class of equity securities. This 
requirement would help ensure that a U.S. investor is able to access 
through EDGAR \75\ and in English all material interim information 
about a foreign private issuer as required by its home country. We 
believe this investor protection concern outweighs any difficulty that 
a foreign private issuer may experience when determining whether a 
particular home country document is material, particularly since a 
foreign private issuer must routinely make materiality judgments under 
existing Exchange Act reporting requirements.
---------------------------------------------------------------------------

    \75\ EDGAR is the Commission's Electronic Data Gathering, 
Analysis and Retrieval System.
---------------------------------------------------------------------------

    From a practical point of view, the proposed 12-month prior 
reporting requirement should not be problematic since, based on current 
experience, most foreign companies that register securities with the 
Commission, including solely under Exchange Act section 12(g), stay in 
the U.S. market for at least a year and file at least one Exchange Act 
annual report.\76\ Moreover, the prior reporting condition would 
require that a foreign private issuer must be current in its reporting 
obligations, not that it must have timely filed all reports required 
during the 12 month period. In the event that an issuer determines that 
it should have filed a Form 6-K during this period, it can do so before 
it files its Form 15F.\77\
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    \76\ See the letter from PricewaterhouseCoopers, which, when 
maintaining that a two-year reporting period was unnecessary, stated 
its belief that ``companies would not generally incur the cost to 
become an SEC registrant if they intended to deregister within a 
two-year period.'' See also Commission staff's annual review of 
foreign private issuers that are Exchange Act reporting companies at 
the end of each calendar year (``International Registered and 
Reporting Companies'' Reports), which are available at the 
Commission's Internet Web site at http://www.sec.gov/ divisions/

corpfin/internatl/companies.shtml.
    \77\ See Part II.D.1. of this release for a discussion of the 
application of reproposed Rule 12h-6, including its prior reporting 
condition, to successor issuers.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the reproposed prior Exchange Act reporting 
condition:
     Is it appropriate to require, as a condition of 
deregistration under Rule 12h-6, that an issuer have been an Exchange 
Act reporting company for at least the 12 months prior to the filing of 
its Form 15F, and to have filed or submitted all Exchange Act reports, 
including one annual report, for that period, as reproposed?
     Should this time period be longer in order to provide U.S. 
investors with a history of Exchange Act reports, including financial 
reports?
     If a foreign private issuer seeking to deregister has not 
timely filed its reports, should any adopted rule require a period of 
time to elapse within which the issuer would have to be both current 
and timely before it could file its Form 15F to cease its Exchange Act 
reporting obligations? If so, should the required period be one month 
or a period longer or shorter than one month?
3. The One Year Dormancy Condition
    As reproposed, a foreign private issuer would also have to comply 
with a one year dormancy condition before it could terminate its 
Exchange Act registration and reporting obligations regarding a class 
of equity securities under Rule 12h-6.\78\ As reproposed, Rule 12h-6 
would prohibit sales of a foreign private issuer's securities in the 
United States in a registered offering under the Securities Act during 
the 12 months preceding the filing of its Form 15F other than 
securities issued:
---------------------------------------------------------------------------

    \78\ Reproposed Rule 12h-6(a)(2).
---------------------------------------------------------------------------

     To the issuer's employees;
     By selling security holders in non-underwritten offerings;
     Upon the exercise of outstanding rights granted by the 
issuer if the rights are granted pro rata to all existing security 
holders of the class of the issuer's securities to which the rights 
attach;
     Pursuant to a dividend or interest reinvestment plan; or
     Upon the conversion of outstanding convertible securities 
or upon the exercise of outstanding transferable warrants issued by the 
issuer.

The primary purpose of the dormancy condition's prohibition of 
registered offerings is to preclude a foreign private issuer from 
exiting the Exchange Act reporting system shortly after it has engaged 
in U.S. capital raising.
    As originally proposed, Rule 12h-6 would have excepted from the 
dormancy condition's prohibition of

[[Page 1394]]

sales of an issuer's registered securities in the United States only 
securities sold to an issuer's employees and those sold by selling 
security holders in non-underwritten offerings. The reproposed rule 
retains these exceptions because, as we noted in the Original Proposing 
Release, these sales are not undertaken primarily for capital-raising 
purposes or for the benefit of the issuer. The reproposed rule 
continues to prohibit sales of an issuer's securities by its selling 
security holders in an underwritten registered offering, despite some 
commenters who opposed this prohibition,\79\ because there is a greater 
likelihood of issuer involvement in a U.S. underwritten offering than 
in a non-underwritten offering of selling security holders.
---------------------------------------------------------------------------

    \79\ See the letter from Cravath.
---------------------------------------------------------------------------

    At the suggestion of some commenters, we propose to add three 
additional exceptions to the dormancy condition's prohibition of sales 
of an issuer's registered securities: \80\ The issuance of registered 
securities pursuant to pro rata rights offerings, dividend or interest 
reinvestment plans, and the conversion of outstanding convertible 
securities. These transactions may occur for reasons unrelated to 
capital raising or for the benefit of the issuer, for example, to 
benefit current security holders or for the convenience of investors. 
However, the reproposed rule also provides that these exceptions do not 
apply to securities issued pursuant to a standby underwritten offering 
or other similar arrangement in the United States. This limitation is 
consistent with the Commission's previous treatment of these three 
types of registered offerings.\81\
---------------------------------------------------------------------------

    \80\ See the letter from ABA (Business).
    \81\ Instruction 2 to Item 8 of Form 20-F imposes a similar 
limitation.
---------------------------------------------------------------------------

    As originally proposed, Rule 12h-6 would also have precluded a 
foreign private issuer from engaging in unregistered offerings in the 
United States during the dormancy period, other than those involving 
securities sold to its employees, securities exempt from registration 
under section 3 of the Securities Act \82\ (except section 3(a)(10)) 
and obligations having a maturity at the time of issuance of less than 
nine months and exempted under section 4(2) of the Securities Act. We 
proposed to prohibit unregistered offerings, such as private 
placements, under the dormancy condition in order to prevent a foreign 
company that has actively engaged in U.S. capital raising efforts and 
sold securities to U.S. investors relatively recently from exiting the 
Exchange Act reporting regime under Rule 12h-6 on the grounds that the 
U.S. securities markets no longer represent as viable an option for 
capital raising. In addition, we believed that proscribing only 
registered offerings could act as a disincentive to a foreign private 
issuer to conduct a registered offering in the United States.
---------------------------------------------------------------------------

    \82\ 15 U.S.C. 77c.
---------------------------------------------------------------------------

    Numerous commenters urged the Commission to exclude unregistered 
offerings from the one year dormancy condition on the grounds that an 
issuer that has engaged in exempted offerings, such as Rule 144A or 
section 4(2) private placements, has not taken advantage of its status 
as a reporting company since both reporting and non-reporting companies 
may engage in those exempted offerings, and since, without a 
contractual undertaking, purchasers in those offerings are not entitled 
to the full protections of the U.S. federal securities laws.\83\ Many 
commenters also warned that, unless the Commission excluded from the 
dormancy requirement exempted unregistered offerings, such as rights 
offerings exempt under Securities Act Rule 801 or exchange offers 
exempt under Securities Act Rule 802, foreign private issuers would 
systematically exclude U.S. investors from these offerings,\84\ thereby 
running counter to the Commission's stated goal of encouraging foreign 
companies to include U.S. holders in these offerings on an equal basis 
with foreign security holders when it adopted the cross-border 
transaction safe harbors of Securities Act Rules 801 and 802 and the 
Tier 1 tender offer rules.\85\
---------------------------------------------------------------------------

    \83\ See, for example, the letters from Cravath, the New York 
State Bar, and Skadden Arps.
    \84\ See, for example, the letter from Linklaters.
    \85\ See Release No. 33-7759 (October 26, 1999), 64 FR 61382 
(November 10, 1999).
---------------------------------------------------------------------------

    Several commenters specifically opposed including schemes of 
arrangement exempted under Securities Act section 3(a)(10) within the 
scope of the dormancy condition. Those commenters noted that many 
schemes of arrangement are undertaken for non-capital raising purposes, 
for example, to effect a redomicile or reorganization for tax 
purposes.\86\ Others believed that prohibiting only registered 
offerings under the dormancy condition would only marginally encourage 
issuers to engage in unregistered offerings instead of registered ones, 
if at all.\87\
---------------------------------------------------------------------------

    \86\ See, for example, the letter from Cleary Gottlieb.
    \87\ See the letter from Linklaters.
---------------------------------------------------------------------------

    These comments have persuaded us that adoption of the originally 
proposed dormancy condition could well drive many private placement 
financings and other unregistered offerings by foreign companies 
offshore, to the detriment of U.S. investors and U.S. broker-dealers, 
since many companies might prefer to finance outside the United States 
under Regulation S than inside the United States, for example, under 
section 4(2) and Rule 144A, in order to avoid triggering the dormancy 
condition. Therefore, we are reproposing a dormancy condition that is 
significantly less restrictive in scope than the proposed condition. 
The reproposed rule would permit the unregistered sale of securities 
that are exempted under the Securities Act. The permitted category of 
securities would include sales pursuant to section 4(2), Regulation D, 
Rule 144A, Rules 801 and 802, and exempt securities under section 3, 
including section 3(a)(10) of the Securities Act.
    At the request of several commenters, the reproposed rule would 
include the definition of ``employee'' under Form S-8 \88\ for the 
purpose of applying the dormancy condition under Rule 12h-6.\89\ That 
definition includes any employee, director, general partner, certain 
trustees, certain insurance agents, and former employees as well as 
executors, administrators or beneficiaries of the estates of deceased 
employees, and a family member of an employee who has received shares 
through a gift or domestic relations order.\90\ Otherwise, a narrow 
interpretation of the term ``employee'' could result in an issuer being 
disqualified from terminating its Exchange Act registration and 
reporting obligations under Rule 12h-6 because it engaged in a sale of 
securities during the dormancy period to an employee's family member or 
other relationship permitted under Form S-8 but not explicitly allowed 
under the new rule.
---------------------------------------------------------------------------

    \88\ 17 CFR 239.16b. Form S-8 is the form used by an Exchange 
Act reporting company to register securities for issuance to its 
employees or those of its subsidiaries or parent under an employee 
benefit plan.
    \89\ See, for example, the letter from ABA (Business).
    \90\ See General Instruction A.1 to Form S-8.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the reproposed dormancy condition:
     Would it be appropriate to adopt the dormancy condition, 
as reproposed?
     Is the reproposed amount of time required for the dormancy 
condition too long or too short?
     Are the reproposed exceptions to the dormancy condition 
appropriate?
     Are certain transactions we initially proposed to exempt 
from the dormancy

[[Page 1395]]

condition, when a public float standard was proposed, no longer 
appropriate for exemption? For example, is there a risk that foreign 
private issuers would issue securities to U.S. investors or employees 
who would then sell them in registered secondary offerings before 
deregistration?
4. Foreign Listing Condition
    As reproposed, Rule 12h-6 would require that, with respect to 
equity securities, for at least the 12 months preceding the filing of 
its Form 15F, a foreign private issuer must have maintained a listing 
of the subject class of securities on an exchange in a foreign 
jurisdiction, which, either singly or together with one other foreign 
jurisdiction, constitutes the primary trading market for the issuer's 
subject class of securities.\91\ The reproposed rule defines ``primary 
trading market'' to mean that at least 55 percent of the trading in the 
foreign private issuer's subject class of securities took place in, on 
or through the facilities of a securities market or markets in no more 
than two foreign jurisdictions during a recent 12-month period.\92\ 
That definition further provides that if an issuer aggregates the 
trading of its securities in two foreign jurisdictions for the purpose 
of Rule 12h-6, the trading market for the issuer's securities in at 
least one of the two foreign jurisdictions must be larger than the U.S. 
trading market for the issuer's securities.\93\
---------------------------------------------------------------------------

    \91\ Reproposed Rule 12h-6(a)(3) (17 CFR 240.12h-6(a)(3)).
    \92\ Reproposed Rule 12h-6 defines ``recent 12-month period'' to 
mean a 12-calendar month period that ended no more than 60 days 
before the filing date of the Form 15F. Rule 12h-6(e)(7).
    \93\ Rule 12h-6(e)(6). As proposed and as adopted, measurement 
under this condition is by reference to average daily trading volume 
(ADTV) as reported by the relevant market. Although the proposing 
release noted that there are differences concerning how various 
markets measure and report trading volume (for example, dealer 
markets versus auction markets), no commenter addressed this point.
---------------------------------------------------------------------------

    The purpose of this foreign listing condition is to help assure 
that there is a non-U.S. jurisdiction that principally regulates and 
oversees the issuance and trading of the issuer's securities and the 
issuer's disclosure obligations to investors. This listing condition 
makes more likely the availability of a set of non-U.S. securities 
disclosure documents to which a U.S. investor may turn for material 
information when making investment decisions about the issuer's 
securities following the termination of its disclosure obligations 
under Rule 12h-6. If the United States was the sole or principal market 
for the foreign private issuer's securities, then the Commission would 
have a greater regulatory interest in continuing to subject the foreign 
company to the Exchange Act reporting regime.
    As originally proposed, Rule 12h-6 would have required a foreign 
private issuer of equity securities to have maintained a listing of the 
subject class of securities for the preceding two years on an exchange 
in its home country. As originally proposed, ``home country'' would 
have had the same meaning as under Form 20-F, which defines ``home 
country'' as the jurisdiction in which the issuer is legally organized, 
incorporated or established and, if different, the jurisdiction where 
it has its principal listing. Originally proposed Rule 12h-6 would 
further have required that a foreign private issuer's home country 
constitute its primary trading market. We proposed to define the term 
``primary trading market'' to mean that at least 55 percent of the 
trading in the foreign private issuer's securities took place in, on or 
through the facilities of a securities market in a single foreign 
country during a recent 12 month period.
    We received a variety of comments on this home country listing 
condition. Although most commenters agreed in principle with a prior 
non-U.S. listing condition, several commenters expressed concern that 
many foreign private issuers would not be able to meet the ``55 percent 
trading in a single non-U.S. market'' threshold of the primary trading 
market definition.\94\ Those commenters urged the Commission to adopt a 
prior listing condition that would permit an issuer to meet the 55 
percent or greater trading threshold by aggregating its trading in more 
than one non-U.S. market.
---------------------------------------------------------------------------

    \94\ See, for example, the letter from Cravath. However, 
commenters did not provide data or other specific information in 
this area.
---------------------------------------------------------------------------

    Some commenters expressed concern that the proposed prior non-U.S. 
listing period was too long.\95\ Other commenters noted that some 
foreign private issuers have their principal trading market in a 
jurisdiction that is different than its place of incorporation or 
principal listing.\96\ For example, some companies are incorporated in 
Switzerland and listed on the Swiss Exchange (SWX), but are primarily 
traded on virt-x, a cross-border electronic trading platform based in 
London that is regulated by the United Kingdom's Financial Services 
Authority. Those companies would not meet the proposed home country 
listing condition because their primary trading market is in the United 
Kingdom, and not in their jurisdiction of incorporation or principal 
listing.
---------------------------------------------------------------------------

    \95\ See the letter from Ziegler, Ziegler & Associates.
    \96\ See the letter from the Swiss Exchange.
---------------------------------------------------------------------------

    In response to commenters' concerns, we are shortening the 
reproposed foreign listing period to one year from the originally 
proposed two years. This change is consistent with our similar revision 
of the proposed prior reporting condition. We also propose to permit an 
issuer to aggregate its trading over two non-U.S. markets for the 
purpose of meeting the foreign listing condition in order to address 
the concerns of issuers that have substantial trading markets in more 
than one country. Finally, we are proposing a ``foreign listing'' 
condition rather than a ``home country'' listing condition in order to 
accommodate issuers that have their primary trading market in 
jurisdictions other than their place of incorporation or principal 
listing. These proposed revisions should increase the flexibility of 
the new rule for many foreign private issuers.
    At the same time, the reproposed foreign listing condition should 
serve to protect the interests of U.S. investors by requiring that at 
least 55 percent of the ADTV of the company's subject class of 
securities must have occurred through the facilities of no more than 
two foreign jurisdictions, and that, if an issuer does aggregate the 
ADTV of its subject class of securities over two non-U.S. 
jurisdictions, at least one of the two foreign markets must be larger 
than the U.S. market for the subject class of securities.\97\ These 
proposed requirements should increase the likelihood that the principal 
pricing determinants for a foreign private issuer's securities are 
located outside the United States and that the issuer is subject to an 
overseas regulator with principal authority for regulating the issuance 
and trading of the issuer' securities and the issuer's disclosure to 
investors.\98\ Consequently, for an issuer meeting these requirements, 
there should be less interruption in the flow of material information 
about the issuer

[[Page 1396]]

once it exits the Exchange Act reporting system, to the benefit of U.S. 
investors.
---------------------------------------------------------------------------

    \97\ For the purpose of the reproposed primary trading market 
determination, an issuer would first measure the ADTV of its listed 
securities aggregated over one or two foreign jurisdictions. It 
would then divide this amount by its worldwide ADTV. This 
denominator would include the ADTV only for those foreign 
jurisdictions in which the issuer has listed the subject class of 
securities as well as its U.S. ADTV. Its U.S. ADTV would include all 
securities of the subject class, whether listed or unlisted.
    \98\ This ``primary trading market'' requirement would also help 
ensure that an issuer's foreign listing represents a significant 
trading market for its equity securities rather than a listing on a 
non-trading market such as the Luxembourg Stock Exchange.
---------------------------------------------------------------------------

    As reproposed, Rule 12h-6 would require issuers to determine that 
the primary trading market for their equity securities is outside the 
United States and, if it is, that the trading volume of their 
securities in the United States does not exceed the threshold under the 
rule. In addition, as noted above, the condition relating to primary 
trading market would help assure that a foreign private issuer would be 
subject to the disclosure and other requirements of a foreign 
regulatory authority. The evolution of market structures could raise a 
number of issues in this area. Non-U.S., private non-exchange trading 
markets may develop in the future whose listed or traded issuers may 
not be subject to the same regulatory treatment by foreign securities 
regulators as listed companies today. Also, securities markets, which 
historically have been organized and regulated along national lines, 
and their listed companies, which also have been largely regulated by 
national securities regulatory authorities, may in the future become 
more transnational. The schemes of regulation for these markets and 
companies may change in response to these continued developments.
Comment Solicited
    We solicit comment on the reproposed foreign listing condition:
     Would it be appropriate to adopt the foreign listing 
condition, as reproposed?
     Should the foreign listing condition be longer or shorter 
than the reproposed condition?
     Is the reproposed definition of primary trading market 
appropriate? Should we instead require an issuer's primary trading 
market to consist of one single foreign country, as initially proposed, 
rather than two foreign countries, as reproposed? Should we instead 
permit an issuer to aggregate the trading in its securities over three 
or more foreign jurisdictions as long as the trading volume in one of 
those jurisdictions is greater than its U.S. trading volume?
     Should the reproposed definition require that more than or 
less than 55% of an issuer's trading occur in the primary trading 
market?
     For purposes of the reproposed primary trading market 
determination, will issuers have difficulty making the necessary 
calculations? If so, what are these difficulties and how might they be 
addressed in the rule?
     Should the worldwide foreign trading component in the 
denominator of the primary trading market calculation include all 
foreign markets in which an issuer's securities are traded, including 
unlisted or over-the-counter trading, rather than only for foreign 
listed markets, as reproposed?
     Should the denominator of the primary trading market 
calculation include only the foreign jurisdictions in the numerator 
plus U.S. ADTV?
     Should the U.S. ADTV component in the denominator of the 
primary trading market calculation include only listed securities 
rather than all U.S. traded securities, whether listed or unlisted, as 
reproposed?
     Will issuers have difficulty obtaining ADTV information 
for trading in the United States, in their primary trading market, or 
elsewhere?
     In the United States, issuers should be able to obtain 
information through the U.S. transaction reporting plan. Do other 
markets or jurisdictions have similar trade reporting arrangements? Is 
additional guidance from the Commission necessary in this area, or will 
issuers be able to make reasonable judgments?
     Should the proposed rule provide additional flexibility 
for the development of trans-national trading markets? If so, what 
types of provisions would be appropriate to address these types of 
markets?

B. Debt Securities Provision

    As reproposed, Rule 12h-6 would enable a foreign private issuer to 
terminate its Exchange Act reporting obligations regarding a class of 
debt securities as long as the issuer has filed or furnished all 
reports required under Exchange Act section 13(a) or section 15(d), 
including at least one Exchange Act annual report, and has its class of 
debt securities held of record by less than 300 holders either on a 
worldwide basis or who are U.S. residents.\99\ This provision reflects 
the minimum reporting requirement and current 300 holder standard under 
section 15(d) and Rule 12h-3.
---------------------------------------------------------------------------

    \99\ Reproposed Rule 12h-6(b).
---------------------------------------------------------------------------

    The reproposed debt securities provision is substantially similar 
to the originally proposed provision.\100\ We did not originally 
propose, and we are not here proposing, a provision comparable to Rule 
12h-3's 500 record holder threshold for debt securities issuers because 
we believe most foreign private issuers that are debt securities 
registrants would likely exceed the $10 million asset threshold that 
accompanies the 500 record holder standard.\101\
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    \100\ We have made one technical revision to the originally 
proposed debt securities provision. An issuer that has listed a 
class of debt securities on an exchange and registered the class 
under section 12(b), without also registering those securities under 
the Securities Act, would have reporting obligations under section 
13(a), not section 15(d) of the Exchange Act. Yet the originally 
proposed debt securities provision only referred to section 15(d) 
obligations. In order to permit the termination of registration and 
reporting under Rule 12h-6 by listed debt issuers, we have revised 
the reporting condition to state that an issuer must have filed or 
furnished all reports required under Exchange Act section 13(a) or 
section 15(d). A listed debt issuer must have terminated its listing 
and section 12(b) registration pursuant to Rule 12d-2 before it 
could effect its termination of reporting under Rule 12h-6.
    \101\ None of the commenters requested that we incorporate the 
500 record holder and $10 million asset standard into proposed Rule 
12h-6's debt securities provision or into the alternative record 
holder condition for equity securities.
---------------------------------------------------------------------------

    A few commenters requested that the Commission increase the debt 
securities record holder threshold to as much as 1,000. We have decided 
against proposing to increase the debt securities threshold at this 
time for the same reasons that we also are not proposing to increase 
the record holder threshold for equity securities issuers as part of 
this rulemaking.
Comment Solicited
    We solicit comment on the reproposed debt securities record holder 
condition:
     Would it be appropriate to adopt the debt securities 
record holder condition, as reproposed?

C. Revised Counting Method

    As originally proposed, Rule 12h-6 would have permitted an issuer 
to use a modified version of the ``look through'' counting method under 
Rule 12g3-2(a) when determining the percentage of a foreign private 
issuer's outstanding equity shares held by its non-affiliates on a 
worldwide basis that are held by U.S. residents or the number of U.S. 
residents holding a foreign private issuer's equity or debt securities. 
Instead of having to look through the accounts of brokers, banks and 
other nominees on a worldwide basis to determine the number of its U.S. 
resident holders, as is required under the current rules, an issuer 
could limit its inquiry to brokers, banks and other nominees located in 
the United States, the issuer's jurisdiction of incorporation, legal 
organization or establishment and, if different, the jurisidiction of 
its primary trading market.\102\ This revised counting method is 
substantially similar to the counting method that the Commission 
adopted under the exemptive rules for cross-border rights offerings, 
exchange offers and business combinations, as

[[Page 1397]]

well as under the definition of foreign private issuer.
---------------------------------------------------------------------------

    \102\ Reproposed Rule 12h-6(d).
---------------------------------------------------------------------------

    The reproposed counting method is substantially the same as 
originally proposed, except for two revisions. Since reproposed Rule 
12h-6 would eliminate the public float benchmark, the reproposed 
counting method would apply only to an issuer of equity securities 
proceeding under the alternative 300 holder provision, or to a debt 
securities issuer that must meet the 300 holder standard. In addition, 
as reproposed, Rule 12h-6 would provide that an issuer that aggregates 
the trading volume of its securities in two foreign jurisdictions for 
the purpose of meeting the rule's listing condition will have to look 
through nominee accounts in both foreign jurisdictions, which comprise 
its primary trading market, and in the United States as well as in its 
jurisdiction of incorporation, if different from the two jurisdictions 
that comprise its primary trading market.
    As part of the counting method provision, we are reproposing a 
presumption that we previously adopted under the cross-border rules and 
definition of foreign private issuer.\103\ This presumption is that, 
if, after reasonable inquiry, an issuer is unable without unreasonable 
effort to obtain information about the amount of securities held by 
nominees for the accounts of customers resident in the United States, 
it may assume that the customers are the residents of the jurisdiction 
in which the nominee has its principal place of business.
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    \103\ See Securities Act Rule 800(h)(4) (17 CFR 230.800(h)(4)) 
and Instruction B to Exchange Act Rule 3b-4(c)(1) (17 CFR 240.3b-
4(c)(1)).
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    Some commenters stated that, while this presumption is useful when 
determining the percentage of an issuer's worldwide public float that 
is held by U.S. residents, it is not much help when an issuer must 
calculate the actual number of its U.S. resident holders for the 
purpose of either the alternative record holder condition for equity 
issuers or the debt securities provision. Those commenters urged the 
Commission to adopt a presumption that would enable an issuer to count 
each nominee as one shareholder located in the nominee's principal 
place of business when the issuer is unable without unreasonable effort 
to obtain information about the nominee's customer accounts.
    We did not adopt the suggested presumption when we adopted the 
counting method for the rule defining the term ``foreign private 
issuer,'' \104\ and we decline to propose it as part of this 
rulemaking. Based on our experience with that definitional rule, we are 
not persuaded that issuers are unable without undue burden to apply the 
current standard using the adopted presumption.
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    \104\ See Release No. 34-41936 (September 28, 1999), 64 FR 53900 
(October 5, 1999).
---------------------------------------------------------------------------

    Some foreign jurisdictions have laws that provide an established 
and enforceable means for a public company to obtain information about 
its shareholders. We solicited comment regarding whether we should 
permit an issuer to rely on information obtained through these foreign 
statutory or code provisions when calculating the percentage of its 
worldwide public float held by U.S. residents or the number of its U.S. 
resident equity or debt holders. We received only two comment letters 
regarding this issue.\105\
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    \105\ Both commenters stated that they had successfully relied 
on section 212 of the United Kingdom Companies Act to obtain 
information about an issuer's shareholders. One of the commenters 
also cited Article L. 228-2 of the French Commercial Code as an 
established and reliable means for a company to obtain shareholder 
information.
---------------------------------------------------------------------------

    Reproposed Rule 12h-6 does not provide that a foreign private 
issuer may rely solely on specified foreign statutory or code 
provisions. However, as part of its inquiry regarding whether it meets 
any of the quantitative benchmarks under Rule 12h-6, an issuer may 
refer to shareholder information obtained pursuant to those foreign 
statutory or code provisions to the extent that this shareholder 
information is reasonably reliable and accurate and furthers the 
purpose of the inquiry.
Comment Solicited
    We solicit comment on the reproposed counting method provison:
     Would it be appropriate to adopt the counting method 
provision, as reproposed?
     How should issuers' experiences with applying the counting 
method under the cross-border rules and definition of foreign private 
issuer inform our decision whether to adopt the reproposed counting 
method?
     The reproposed counting method would limit the current 
required worldwide search for nominees of U.S. holders to the U.S., the 
jurisdiction of incorporation or organization, and possibly the primary 
trading market. Are these limits appropriate? If not, should the search 
be further limited or expanded?

D. Expanded Scope of Rule 12h-6

    In response to comments on the appropriate scope of Rule 12h-6, we 
propose to expand the rule in two respects. First, we propose to 
provide that an issuer that has succeeded to the Exchange Act reporting 
obligations of an acquired company may terminate those reporting 
obligations under Rule 12h-6 as long as it satisfies specified 
conditions. Second, we propose to extend the application of Rule 12h-6 
to a foreign private issuer that previously filed a Form 15 and 
effected its termination of registration or suspension of reporting 
under the current exit rules before the effective date of Rule 12h-6, 
subject to conditions.
1. Application of Rule 12h-6 to Successor Issuers
    In the Original Proposing Release, we requested comment on the 
prior Exchange Act reporting condition. Several commenters expressed 
their concern that, as proposed, an issuer that has succeeded to the 
Exchange Act reporting obligations of an acquired company pursuant to 
Rule 12g-3 or 15d-5 \106\ may not be able to terminate its reporting 
obligations under Rule 12h-6 because of the proposed rule's reporting 
condition, although the successor issuer satisfies the rule's other 
requirements. In order to address this concern, reproposed Rule 12h-6 
specifically provides that, following a merger, consolidation, exchange 
of securities, acquisition of assets or otherwise, a foreign private 
issuer that has succeeded to the reporting obligations under Exchange 
Act section 13(a) of another issuer pursuant to Rule 12g-3, or to the 
reporting obligations of another issuer under Exchange Act section 
15(d) pursuant to Rule 15d-5, may file a Form 15F to terminate those 
reporting obligations if, regarding a class of equity securities, the 
successor issuer meets Rule 12h-6's prior reporting, foreign listing, 
and quantitative benchmark conditions.\107\ Regarding a class of debt 
securities, the successor issuer must meet the conditions under Rule 
12h-6(b), including the revised reporting condition. Reproposed Rule 
12h-6 then provides that, when determining whether it meets the prior 
reporting condition under either the equity or debt securities 
provision of the final rule, a successor issuer may take into account 
the reporting history of the issuer whose reporting obligations it has 
assumed pursuant to Rule 12g-3 or 15d-5.\108\
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    \106\ 17 CFR 240.12g-3 and 240.15d-5.
    \107\ Reproposed Rule 12h-6(c)(1).
    \108\ Reproposed Rule 12h-6(c)(2).
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    This successor issuer provision would enable a non-Exchange Act 
reporting foreign private issuer that acquires a reporting foreign 
private issuer in a

[[Page 1398]]

transaction exempt under the Securities Act, for example, under Rule 
802 or section 3(a)(10), to qualify immediately for termination of its 
Exchange Act reporting obligations under Rule 12h-6, without having to 
file an Exchange Act annual report, as long as the successor issuer 
meets the rule's listing and quantitative benchmark conditions, and the 
acquired company's reporting history fulfills Rule 12h-6's prior 
reporting condition. Since the successor issuer would have assumed the 
acquired company's Exchange Act reporting obligations, we believe that 
it is appropriate that the issuer succeed to the acquired company's 
reporting history for the purpose of Rule 12h-6.
    However, if a previously non-Exchange Act reporting foreign private 
issuer acquires an Exchange Act reporting company by consummating an 
exchange offer, merger or other business combination registered under 
the Securities Act, most likely on a Form F-4 registration statement, 
the acquiror would have to fulfill Rule 12h-6's prior reporting 
condition without reference to the acquired company's reporting 
history. Since the acquiror would have triggered its own section 15(d) 
reporting obligations upon the effectiveness of its Securities Act 
registration statement, it would have to meet Rule 12h-6's full 
reporting condition like any other section 15(d) reporting company 
before it could terminate its reporting obligations under the new rule.
Comment Solicited
    We solicit comment on the proposed expanded scope of Rule 12h-6 
with respect to successor issuers:
     Should an issuer be permitted to terminate its Exchange 
Act reporting obligations under Rule 12h-6 if, following a merger, 
acquisition or other similar transaction in which it has succeeded to 
Exchange Act reporting obligations pursuant to Rule 12g-3, it meets 
Rule 12h-6's foreign listing and quantitative benchmark requirements, 
and the acquired company's reporting history fulfills Rule 12h-6's 
prior reporting condition, as proposed?
     Should we require that the Exchange Act reporting target 
company have satisfied the trading volume or 300 record holder 
benchmark just prior to completing one of the above transactions before 
a successor issuer may proceed under Rule 12h-6?
     Should there be limitations placed on a successor issuer's 
eligibility to use Rule 12h-6? If so, what are those limitations?
2. Application of Rule 12h-6 to Prior Form 15 Filers
    As originally proposed, Rule 12h-6 would have applied only to 
reporting foreign private issuers that have not yet filed a Form 15 to 
cease their Exchange Act reporting obligations. In response to our 
request for comments concerning the scope of proposed Rule 12h-6 and on 
the current exemptive scheme for foreign private issuers,\109\ numerous 
commenters urged the Commission to expand the scope of Rule 12h-6 by 
extending it to foreign private issuers that have previously filed a 
Form 15 and thereby already terminated or suspended their Exchange Act 
reporting obligations under the current exit rules.\110\
---------------------------------------------------------------------------

    \109\ See Release No. 34-53020 at pp. 20 and 69-70.
    \110\ See the letters from the European Commission, Cleary 
Gottlieb and Makinson Cowell.
---------------------------------------------------------------------------

    We agree with those commenters who stated that foreign private 
issuers should not be denied the benefits of the new exit regime simply 
because they met the requirements for ceasing their Exchange Act 
reporting obligations under the current rules and followed the only 
exit procedure available to them.\111\ We see no meaningful distinction 
between an issuer that would qualify for termination of Exchange Act 
reporting under the alternative record holder provision of Rule 12h-6 
and a Form 15 filer that has already met the record holder requirements 
under Rule 12g-4 or Rule 12h-3 but, under the proposed rule amendments, 
would continue to have to count its U.S. shareholders annually in order 
to determine whether it has renewed or assumed anew Exchange Act 
reporting obligations.
---------------------------------------------------------------------------

    \111\ These benefits include termination of Exchange Act 
reporting regarding a subject class of securities and the immediate 
availability of the Rule 12g3-2(b) exemption upon the termination of 
reporting.
---------------------------------------------------------------------------

    Accordingly, as reproposed, Rule 12h-6 would extend termination of 
Exchange Act reporting to a foreign private issuer that, before the 
effective date of Rule 12h-6, has already effected the suspension or 
termination of its Exchange Act reporting obligations after filing a 
Form 15. Since these filers have already met a quantitative standard 
under the current exit rules, they would not have to meet any other 
quantitative benchmark under Rule 12h-6. They also would not have to 
satisfy the prior reporting or dormancy provisions since they would 
already be non-reporting entities.
    However, a prior Form 15 filer would have to meet the following 
conditions in order to obtain the benefits of Rule 12h-6:
     The issuer must currently not be required to register a 
class of securities under section 12(g) or be required to file reports 
under section 15(d);
     the issuer must file a Form 15F; and
     if its Form 15 applied to a class of equity securities, 
for at least the 12 months before the filing of its Form 15F, the 
issuer must have maintained a listing of the subject class of equity 
securities on an exchange in a foreign jurisdiction, which, either 
singly or together with another foreign jurisdiction, constitutes the 
primary trading market for the issuer's class of subject securities.
    As with any other foreign private issuer of equity securities that 
elects to terminate its reporting obligations under Rule 12h-6, the 
purpose of the proposed listing condition is to help ensure that the 
prior Form 15 filer is subject to a foreign regulator and a non-U.S. 
body of regulation governing the trading of the issuer's securities and 
its disclosure obligations to its shareholders. This listing condition 
makes more likely the availability of a set of home country securities 
documents to which a U.S. investor may turn for material information 
when making investment decisions about the issuer's securities 
following the termination of its disclosure obligations under Rule 12h-
6.
    The purpose of the proposed Form 15F filing requirement is to 
notify investors and alert the Commission that the prior Form 15 filer 
is claiming the benefits of Rule 12h-6, to have the issuer certify that 
it meets the conditions of the new rule, and to provide the issuer's 
Internet Web site address.\112\
---------------------------------------------------------------------------

    \112\ A prior Form 15 filer would have to furnish its home 
country documents, required under Rule 12g3-2(b), on the Internet 
the same as any other Form 15F filer. See Part II.H., below.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed expanded scope of Rule 12h-6 
with respect to prior Form 15 filers:
     Is it appropriate to permit an issuer that, before the 
effective date of Rule 12h-6, has terminated or suspended its Exchange 
Act reporting obligations by filing a Form 15, to obtain the benefits 
of termination under Rule 12h-6, as proposed?
     Are the proposed requirements that a prior Form 15 filer 
must meet in order to be eligible to proceed under Rule 12h-6 
appropriate? Are there any other eligibility requirements that we 
should add?

[[Page 1399]]

E. Public Notice Requirement

    We are reproposing a public notice requirement as a condition to 
termination of reporting under Rule 12h-6, except for prior Form 15 
filers.\113\ Pursuant to this requirement, an issuer of equity or debt 
securities or a successor issuer would have to publish, either before 
or on the date that it files its Form 15F, a notice in the United 
States that discloses its intent to terminate its section 13(a) or 
15(d) reporting obligations. The issuer would have to publish the 
notice, such as a press release, through a means reasonably designed to 
provide broad dissemination of the information to the public in the 
United States. The issuer also would be required to submit a copy of 
the notice, either under cover of a Form 6-K before or at the time of 
filing of the Form 15F, or as an exhibit to the Form 15F. The primary 
purpose of this reproposed notice provision is to alert U.S. investors 
who have purchased the issuer's securities about the issuer's intended 
exit from the Exchange Act registration and reporting system.
---------------------------------------------------------------------------

    \113\ Reproposed Rule 12h-6(g).
---------------------------------------------------------------------------

    The reproposed notice provision is substantially similar to the 
originally proposed notice requirement, except that, under the earlier 
proposed provision, the issuer would have had to publish the notice at 
least 15 business days before it files its Form 15F. At the suggestion 
of commenters, we have revised the notice provision simply to require 
an issuer to publish the notice before or on the date of filing of its 
Form 15F. We agree that a fixed, prior Form 15F notice requirement 
would be of little benefit to investors and would only serve to prolong 
the termination process.
    The reproposed notice requirement would not apply to a prior Form 
15 filer that files a Form 15F to terminate its registration and 
reporting obligations under Rule 12h-6(h). Since a prior Form 15 filer 
would already have ceased its Exchange Act reporting obligations, 
investors would gain little from the publishing of such a notice.
Comment Solicited
    We solicit comment on the reproposed notice requirement:
     Would it be appropriate to adopt the notice requirement, 
as reproposed?
     Should we require an issuer to mail a copy of the notice 
to each of its U.S. investors in addition to, or in lieu of, publishing 
the notice through a press release or other publicly disseminated 
means?

F. Form 15F

    Like our current exit rules, reproposed Rule 12h-6 would require a 
foreign private issuer to file electronically on EDGAR a form 
certifying that it meets the requirements for ceasing its Exchange Act 
reporting obligations. By signing and filing new Form 15F, a foreign 
private issuer would be certifying that:
     It meets all of the conditions for termination of Exchange 
Act reporting specified in Rule 12h-6; and
     There are no classes of securities other than those that 
are the subject of the Form 15F regarding which the issuer has Exchange 
Act reporting obligations.
    Unlike current Form 15, reproposed Form 15F would require a foreign 
private issuer to provide disclosure regarding several items in order 
to provide investors with information regarding an issuer's decision to 
terminate its Exchange Act reporting obligations. The information would 
also assist Commission staff in monitoring the use of Rule 12h-6.
    Most commenters that addressed the originally proposed Form 15F 
generally agreed with its form and content. Accordingly, the reproposed 
Form 15F is substantially similar to the earlier proposed Form 15F. 
Like the originally proposed form, the reproposed Form 15F would 
solicit information regarding:
     An issuer's Exchange Act reporting history;
     When it last sold registered securities in the United 
States other than those excluded from consideration under Rule 12h-6;
     The primary trading market for an issuer's equity 
securities that is the subject of its Form 15F;
     Trading volume data for an issuer's equity securities in 
the United States and in its primary trading market, if applicable;
     The number of an issuer's equity or debt securities record 
holders, if applicable; and
     The classes of equity and debt securities, if any, that 
are the subject of the Form 15F.
    In addition, we have revised the proposed form to conform to the 
changes to the originally proposed Rule 12h-6, as reproposed today. 
These revisions include adding items to acquire material information 
concerning a Form 15F filer:
     That is a successor issuer;
     That is a prior Form 15 filer;
     That has a primary trading market composed of two foreign 
jurisdictions; and
     That may have delisted or terminated an ADR facility prior 
to filing the Form 15F.
    As with Form 15, and as originally proposed, filing of the 
reproposed Form 15F would immediately suspend an issuer's Exchange Act 
reporting obligations regarding the subject class of securities and 
commence a 90-day waiting period. If, at the end of this 90-day period, 
the Commission has not objected to the filing, the suspension would 
automatically become a termination of registration and reporting. If 
the Commission denies the Form 15F or the issuer withdraws it, within 
60 days of the date of the denial or withdrawal, the issuer would be 
required to file or submit all reports that would have been required 
had it not filed the Form 15F.\114\
---------------------------------------------------------------------------

    \114\ Reproposed Rule 12h-6(f).
---------------------------------------------------------------------------

    Some commenters requested that we shorten the 90 day period to 60 
days or lengthen the time in which an issuer must file or submit 
Exchange Act reports upon withdrawal of its Form 15F. We are not 
proposing to do so because the reproposed time periods are based on 
those established under Form 15 and the current exit rules, which we 
believe have proven adequate.
    After filing the reproposed Form 15F, an issuer would have no 
continuing obligation to make inquiries or perform other work 
concerning the information contained in the Form 15F, including its 
assessment of trading volume or ownership of its securities. However, 
the reproposed Form 15F would require an issuer to undertake to 
withdraw its Form 15F before the date of effectiveness if it has actual 
knowledge of information that causes it reasonably to believe that, at 
the date of filing the Form 15F:
     The average daily trading volume of its subject class of 
securities in the United States during a recent 12-month period 
exceeded 5 percent of the average daily trading volume of that class of 
securities in the issuer's primary trading market during the same 
period, if proceeding under Rule 12h-6(a)(4)(i);
     Its subject class of securities was held of record by 300 
or more United States residents or 300 or more persons worldwide, if 
proceeding under Rule 12h-6(a)(4)(ii) or Rule 12h-6(b); or
     It otherwise no longer qualified for termination of its 
Exchange Act reporting obligations under Rule 12h-6.
    While this reproposed undertaking is substantially similar to the 
originally proposed undertaking, in response to commenters, we have 
added the phrase ``at the date of filing'' to clarify that an issuer 
would not be required to withdraw a Form 15F due to changes in

[[Page 1400]]

its trading volume or share ownership occurring after the date of 
filing.\115\
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    \115\ We also are reproposing amendments to the rules governing 
the Commission's delegated authority to permit staff of the Division 
of Corporation Finance to accelerate the effectiveness of an 
issuer's termination of registration and reporting under Rule 12h-6 
before the 90th day at the issuer's request. The issuer must make 
this request in writing and file it on EDGAR. Nevertheless, Division 
of Corporation Finance staff may submit requests to accelerate the 
effectiveness of an issuer's termination of registration and 
reporting pursuant to Rule 12h-6 to the Commission for 
consideration, as appropriate. As we noted in the Original Proposing 
Release, there is currently a similar delegation relating to Form 
15, which is rarely used.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the reproposed Form 15F filing requirement:
     Would it be appropriate to adopt the Form 15F filing 
requirement, as reproposed?
     Are there any items that should be added to the Form 15F? 
Are there any reproposed items that should be removed?

G. Amended Rules 12g-4 and 12h-3

    Although similar to the current 300 record holder standard, 
reproposed Rule 12h-6's alternative threshold record holder condition 
and its debt securities provision would offer advantages compared to 
the current exit rules. As reproposed, Rule 12h-6's revised counting 
method would limit the jurisdictions in which a foreign private issuer 
must search for records of its U.S. resident holders. Moreover, 
reproposed Rule 12h-6 would enable a foreign private issuer to 
terminate, rather than merely suspend, its section 15(d) reporting 
obligations regarding a class of equity or debt securities. In 
addition, under reproposed Rule 12h-6, a foreign private issuer would 
be able to claim the benefits of the Rule 12g3-2(b) exemption 
immediately upon the effectiveness of its termination of reporting 
regarding a class of equity securities under section 12(g) or 15(d). In 
each instance, once its termination of reporting becomes effective 
under Rule 12h-6, an issuer would no longer have to concern itself with 
whether the number of its U.S. resident or worldwide holders of the 
class of subject securities has risen above the statutory or regulatory 
threshold.
    Given these advantages, we believe that, following the adoption of 
reproposed Rule 12h-6, few, if any, foreign private issuers would elect 
to proceed under the provisions of Rule 12g-4 or Rule 12h-3 that allow 
a foreign private issuer to terminate its registration of a class of 
securities under section 12(g) or suspend the duty to file reports 
under section 15(d) if the class of securities is held by less than 300 
U.S. residents or by 500 U.S. residents and the issuer has had total 
assets not exceeding $10 million on the last day of each of its most 
recent three fiscal years.\116\ Accordingly, we are reproposing the 
amendments to eliminate these provisions in Rules 12g-4 and 12h-3, as 
originally proposed.
---------------------------------------------------------------------------

    \116\ See Exchange Act Rules 12g-4(a)(2) and 12h-3(b)(2).
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the reproposed amendments to Rules 12g-4 and 
12h-3:
     Would it be appropriate to adopt the amendment to the 
current exit rules, as reproposed?

H. Amendment Regarding the Rule 12g3-2(b) Exemption

    We are reproposing, substantially as originally proposed, an 
amendment to Exchange Act Rule 12g3-2 \117\ that would apply the 
exemption under Exchange Act Rule 12g3-2(b) immediately to an issuer of 
equity securities upon the effectiveness of its termination of 
reporting under Rule 12h-6.\118\ As a condition to the immediate 
application of the Rule 12g3-2(b) exemption upon its termination of 
reporting under Rule 12h-6, an issuer would have to publish 
subsequently in English material home country documents required under 
Rule 12g3-2(b)(1)(iii) on its web site or through an electronic 
information delivery system generally available to the public in its 
primary trading market.\119\
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    \117\ Reproposed Rule 12g3-2(e).
    \118\ Currently, foreign private issuers that registered a class 
of securities under section 12 must wait at least 18 months 
following their termination of reporting before they would be 
eligible to apply for the Rule 12g3-2(b) exemption. In addition, 
foreign private issuers with an active or suspended reporting 
obligation under section 15(d) have thus far not been eligible to 
claim the Rule 12g3-2(b) exemption. See Rule 12g3-2(d)(1) (17 CFR 
240.12g3-2(d)(1)), which currently excepts from the 18 month 
requirement issuers that have filed Securities Act registration 
statements using the Multijurisdictional Disclosure Act (MJDS) 
forms.
    \119\ Reproposed Rule 12g3-2(e)(2).
---------------------------------------------------------------------------

    The purpose of this condition is to provide U.S. investors with 
access to material information about an issuer of equity securities 
following its termination of reporting pursuant to Rule 12h-6.\120\ In 
addition, an issuer would be able to maintain a sponsored ADR facility 
with respect to its securities.\121\ This condition also would 
facilitate resales of that issuer's securities to qualified 
institutional buyers under Rule 144A.\122\ Moreover, having a foreign 
private issuer's key home country documents posted in English on its 
web site would assist U.S. investors who are interested in trading the 
issuer's securities in its primary securities market.\123 \
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    \120\ Any post-termination trading of a foreign private issuer's 
securities in the United States would have to occur through over-
the-counter markets such as that maintained by the Pink Sheets, LLC 
since, as of April, 1998, the NASD and the Commission have required 
a foreign private issuer to register a class of securities under 
Exchange Act section 12 before its securities could be traded 
through the electronic over-the-counter bulletin board administered 
by Nasdaq. See, for example, NASD Notice to Members (January 1998).
    \121\ In order to establish an ADR facility, an issuer must 
register the ADRs on Form F-6 (17 CFR 239.36) under the Securities 
Act. The eligibility criteria for the use of Form F-6 include the 
requirement that the issuer have a reporting obligation under 
Exchange Act section 13(a) or have established the exemption under 
Rule 12g3-2(b).
    \122\ See Securities Act Rule 144A(d)(4) (17 CFR 
230.144A(d)(4)).
    \123\ Brokers currently are exempt from complying with certain 
information obligations under Exchange Act Rule 15c2-11 (17 CFR 
240.15c2-11) when a foreign company has established and maintains 
the Rule 12g3-2(b) exemption. See Release No. 34-41110 (February 
25,1999), 64 FR 11124 (March 8, 1999).
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    The reproposed extension of Rule 12g3-2(b) would apply both to a 
class of equity securities formerly registered under section 12(g) and 
one that formerly gave rise to section 15(d) reporting obligations, as 
originally proposed. The Rule 12g3-2(b) exemption received under 
reproposed Rule 12g3-2(e) would remain in effect for as long as the 
foreign private issuer satisfies the rule's electronic publication 
conditions or until the issuer registers a new class of securities 
under section 12 or incurs section 15(d) reporting obligations by 
filing a new Securities Act registration statement, which has become 
effective.\124\
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    \124\ See Reproposed Rule 12g3-2(e)(3).
---------------------------------------------------------------------------

    Some commenters have suggested that we make the application of the 
Rule 12g3-2(b) exemption optional rather than automatic upon the 
termination of reporting under Rule 12h-6. We decline to do so as part 
of the reproposed rule amendments because we do not believe that such 
an amendment would be in the best interests of U.S. investors. Enabling 
an issuer to claim the exemption immediately upon termination of 
reporting under Rule 12h-6, rather than upon application or notice to 
the Commission at some later date, should foster the prompt publishing 
of that issuer's material home country documents on its Internet Web 
site, to the benefit of investors.\125\
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    \125\ An issuer that does not want to claim the Rule 12g3-2(b) 
exemption immediately following its deregistration under Rule 12h-6 
could abstain from posting its home country documents on its Web 
site at that time.

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[[Page 1401]]

1. Extension of the Rule 12g3-2(b) Exemption Under Reproposed Rule 
12g3-2(e)
    As reproposed, because Rule 12g3-2(e) applies to any issuer that 
has terminated its reporting under Rule 12h-6, the rule amendment would 
effectively extend the Rule 12g3-2(b) exemption to:
     A foreign private issuer of equity securities immediately 
upon its termination of reporting pursuant to Rule 12h-6(a);
     A successor issuer immediately upon its termination of 
reporting pursuant to Rule 12h-6(c); and
     A prior Form 15 filer immediately upon its termination of 
reporting pursuant to Rule 12h-6(h).
    Currently Rule 12g3-2(d)(2) precludes extending the Rule 12g3-2(b) 
exemption to a foreign private issuer, other than a Canadian issuer 
using the MJDS forms, that has issued securities in a merger or other 
similar transaction to acquire a company that has registered a class of 
securities under section 12 or has a reporting obligation under section 
15(d). As reproposed, we would amend Rule 12g3-2(d)(2) effectively to 
extend the Rule 12g3-2(b) exemption to a successor issuer that has 
terminated its Exchange Act reporting obligations under Rule 12h-6(c). 
Since we have proposed to permit a successor issuer to rely on its 
predecessor's reporting history for the purpose of Rule 12h-6, we 
believe the issuer should also benefit from claiming the Rule 12g3-2(b) 
exemption immediately upon the effectiveness of its Form 15F.
    We also propose to extend the Rule 12g3-2(b) amendment immediately 
upon the termination of reporting pursuant to Rule 12h-6(h) to a 
foreign private issuer that, before the effective date of Rule 12h-6, 
terminated its registration or suspended its reporting obligations 
regarding a class of equity securities after filing a Form 15. This is 
consistent with our proposed expansion of the scope of Rule 12h-6 to 
encompass prior Form 15 filers. Without this change, a prior Form 15 
filer would find itself subject to the 18 month waiting period that 
currently exists under Rule 12g3-2(d), although the issuer qualified 
for termination of reporting under Rule 12h-6(h).
    We further propose to permit a foreign private issuer that filed a 
Form 15F solely to terminate its reporting obligations regarding a 
class of debt securities to apply for the Rule 12g3-2(b) exemption for 
a class of equity securities any time after the effectiveness of its 
termination of reporting regarding the class of debt securities.\126\ 
Since we are reproposing to abolish the 18 month ``waiting period'' for 
equity securities issuers that have terminated their Exchange Act 
reporting obligations pursuant to Rule 12h-6, it would serve no useful 
purpose to impose this waiting period on a debt securities issuer that 
has terminated its reporting obligations regarding a class of debt 
securities under Rule 12h-6 and, sometime thereafter, determines that 
it will need the Rule 12g3-2(b) exemption for a class of equity 
securities.
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    \126\ Reproposed Rule 12g3-2(e)(4).
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    However, contrary to the suggestions of some commenters, we are not 
proposing to permit a debt securities issuer to claim the Rule 12g3-
2(b) exemption immediately upon the effectiveness of termination of its 
debt securities under Rule 12h-6 on the possibility that, at some 
future date, it may require the exemption for a class of equity 
securities. When that date arrives, the issuer may submit an 
application for the Rule 12g3-2(b) exemption, which will provide the 
Commission with current information about the outstanding class of 
equity securities, including U.S. ownership information.
Comment Solicited
    We solicit comment on the reproposed amendments to Rule 12g3-2:
     Would it be appropriate to extend the Rule 12g3-2(b) 
amendment to an issuer immediately upon the effectiveness of its 
termination of Exchange Act reporting obligations under Rule 12h-6, as 
reproposed?
     Would it be appropriate to extend the Rule 12g3-2(b) 
amendment to successor issuers and prior Form 15 filers that are 
eligible to file a Form 15F under Rule 12h-6, as reproposed?
     What are the estimated annual costs of electronically 
publishing the material home country documents required by Rule 12g3-
2(b), as proposed?
2. Electronic Publishing of Home Country Documents
    Currently foreign companies claim the Rule 12g3-2(b) exemption by 
submitting to the Commission on an ongoing basis the material required 
by the rule. This material may only be submitted in paper format.\127\ 
Because paper submissions are more difficult to access, we are 
reproposing Rule 12g3-2(e), which relies on electronic access to a 
foreign company's home country securities documents, although not 
through the Commission's electronic database.
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    \127\ A non-Exchange Act reporting issuer that has successfully 
filed an application for the Rule 12g3-2(b) exemption must currently 
furnish its home country documents in paper because the application 
is analogous to one submitted for an exemption under Exchange Act 
section 12(h). See Regulation S-T Rule 101(c)(16) (17 CFR 
232.101(c)(16)). Although the Commission's EDGAR database contains 
an entry signifying the receipt of paper documents, materials 
received in paper are not accessible through the EDGAR system.
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    As part of the condition requiring an issuer to publish its home 
country documents required under Rule 12g3-2(b)(1)(iii) on its Internet 
Web site or through an electronic information delivery system generally 
available to the public in its primary trading market, reproposed Rule 
12g3-2(e) would require an issuer to publish English translations of 
the following documents on its web site:
     Its annual report, including or accompanied by annual 
financial statements;
     Interim reports that include financial statements;
     Press releases; and
     All other communications and documents distributed 
directly to security holders of each class of securities to which the 
exemption relates.\128\
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    \128\ Reproposed Note 1 to Rule 12g3-2(e). Rule 12g3-2(b) 
requires an exempt issuer to submit substantially the same 
categories of home country documents as a reporting issuer must 
furnish to the Commission under cover of Form 6-K. Moreover, both 
Rule 12g3-2(b) and Form 6-K state that only material information 
need be furnished under the rule and form. See Rule 12g3-2(b)(3) (17 
CFR 240.12g3-2(b)(3)) and General Instruction B to Form 6-K.
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    Reproposed Rule 12g3-2(e) would further require a foreign private 
issuer of equity securities to disclose in the Form 15F the address of 
its Internet Web site or that of the electronic information delivery 
system in its primary trading market on which it will publish the 
information required under Rule 12g3-2(b)(1)(iii).\129\ The purpose of 
this requirement is to alert investors and the Commission regarding 
where investors and others may find the company's home country 
documents should a problem arise concerning the Internet location of 
those documents.
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    \129\ Note 3 to reproposed Rule 12g3-2(e). An issuer would not 
have to update the Form 15F to reflect a change in that address.
---------------------------------------------------------------------------

    Currently non-reporting issuers that seek the Rule 12g3-2(b) 
exemption must submit their letter application for the exemption and 
their home country documents to the Commission in paper. We agree with 
the commenters who stated that the same primary reason for requiring an 
issuer to publish its home country documents on its Internet Web site 
after it terminates its reporting obligations under Rule 12h-6 applies 
equally to current Rule 12g3-2(b)

[[Page 1402]]

exempt companies and the non-reporting companies that eventually will 
apply for the exemption. In each case, the electronic posting of an 
issuer's home country documents would increase an investor's ability to 
access those documents.
    Therefore, we propose to amend Rule 12g3-2 to permit a foreign 
private issuer that, upon application to the Commission and not after 
filing Form 15F, has obtained or will obtain the Rule 12g3-2(b) 
exemption to publish its home country documents that it is required to 
furnish on a continuous basis under Rule 12g3-2(b)(1)(iii) on its 
Internet Web site or through an electronic information delivery system 
generally available to the public in its primary trading market.\130\ 
As a condition to this electronic posting, an issuer that wishes to use 
this procedure would have to comply with the English translation 
requirements of reproposed Rule 12g3-2(e). It also would have to 
provide the Commission with the address of its Internet Web site or 
that of the electronic information delivery system in its primary 
trading market in its application for the Rule 12g3-2(b) exemption or 
in an amendment to that application.
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    \130\ Reproposed Rule 12g3-2(f).
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    Because currently the Commission does not have an established means 
for a non-reporting company to submit electronically to the Commission 
its initial documents under Rule 12g3-2(b)(1)(i) and (ii),\131\ an 
applicant would have to continue to submit its letter application and 
the home country documents submitted in support of its initial 
application to the Commission in paper.\132\ Commenters provided 
several suggestions in response to our request for comments relating to 
the operation of Rule 12g3-2(b) in general. We will consider these 
suggestions in future rulemaking, as appropriate.
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    \131\ 17 CFR 240.12g3-2(b)(1)(i) and (ii).
    \132\ As under current practice, the applicant should send these 
initial materials to the Commission's Office of International 
Corporate Finance in the Division of Corporation Finance.
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    Some commenters suggested that the Commission impose a specific 
time limit, for example 3 years, governing how long an issuer must keep 
its home country documents on its Internet Web site. We decline to 
propose a specific time limit primarily because different types of home 
country documents may require different periods of electronic posting. 
While an issuer would be required to post electronically a home country 
document for a reasonable period of time, what constitutes a reasonable 
period would depend on the nature and purpose of the home country 
document. At a minimum, we suggest companies provide Web site access to 
their home country reports for at least a 12 month period.
    We solicit comment on the reproposed electronic publishing 
requirement:
     Is it appropriate to require an issuer, which has claimed 
the Rule 12g3-2(b) exemption immediately upon the effectiveness of its 
termination of Exchange Act reporting obligations under Rule 12h-6, to 
publish in English its material home country documents required by Rule 
12g3-2(b) on its Internet web site or through an electronic information 
delivery system generally available to the public in its primary 
trading market, as reproposed?
     Is it appropriate to permit an issuer that has obtained 
the Rule 12g3-2(b) exemption upon application to the Commission, and 
not under reproposed Rule 12h-6, to publish in English its material 
home country documents required by Rule 12g3-2(b) on its Internet web 
site or through an electronic information delivery system generally 
available to the public in its primary trading market, as reproposed?
General Request for Comments
    We solicit comment on reproposed Rule 12h-6, reproposed Form 15F, 
reproposed amendments to Rules 12g-4, 12h-3, and 12g3-2, as well as to 
all other aspects of the reproposed rule amendments. Here and 
throughout the release, when we solicit comment, we are interested in 
hearing from all interested parties, including members and 
representatives of the investing public, representatives of foreign 
companies and foreign industry groups, representatives of broker-
dealers, domestic issuers, and other participants in U.S. securities 
markets. We are further interested in learning from all parties what 
aspects of the rule reproposal they deem essential, what aspects they 
believe are preferred but not essential, and what aspects they believe 
should be modified. We also would like to know whether there are any 
facts or considerations not discussed in the comment letters submitted 
in response to the Original Proposing Release that, in your opinion, 
make adoption of reproposed Rule 12h-6 and the accompanying reproposed 
rule amendments inappropriate? We are still interested in commenters' 
views on the questions posed in the Original Proposing Release, as we 
are still considering those questions in light of the reproposal. Due 
to the advanced stage of this rulemaking, we intend to act 
expeditiously on the reproposed rules, so we encourage you to submit 
your comments promptly.

III. Paperwork Reduction Act Analysis

    The reproposed rule amendments contain ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act of 1995 (``PRA'').\133\ The titles of the affected 
collection of informations are Form 20-F (OMB Control No. 3235-0288), 
Form 40-F (OMB Control No. 3235-0381), Form 6-K (OMB Control No. 3235-
0116), new Form 15F, and submissions under Exchange Act Rule 12g3-2 
(OMB Control No. 3235-0119).\134\ An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
such as Form 20-F or new Form 15F unless it displays a currently valid 
OMB control number. Compliance with the disclosure requirements of new 
Form 15F and new Rule 12h-6, which will affect the above collections of 
information, is mandatory.
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    \133\ 44 U.S.C. 3501 et seq.
    \134\ 134 A limited number of foreign private issuers file 
annual reports on Form 10-K (17 CFR 249.310) and a limited number of 
foreign private issuers file annual reports on Form 10-KSB (17 CFR 
249.310b). In voluntarily electing to file periodic reports using 
domestic issuer forms, these issuers seem to have closely aligned 
themselves with the U.S. market. Accordingly, for the purpose of the 
Paperwork Reduction Act Analysis, these issuers do not appear likely 
to terminate their Exchange Act registration under new Rule 12h-6, 
and we have assumed that none of these companies will seek to use 
Rule 12h-6. Foreign private issuers that file periodic reports using 
domestic issuer forms will be eligible, nonetheless, to use Rule 
12h-6.
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    Form 20-F sets forth the disclosure requirements for a foreign 
private issuer's annual report and registration statement under the 
Exchange Act as well as many of the disclosure requirements for a 
foreign private issuer's registration statements under the Securities 
Act. We adopted Form 20-F pursuant to the Exchange Act and the 
Securities Act in order to provide investors with information about 
foreign private issuers that have registered securities with the 
Commission.
    Form 40-F sets forth the disclosure requirements regarding the 
annual report and registration statement under the Exchange Act for a 
Canadian issuer that is qualified to use the Multijurisdictional 
Disclosure System (``MJDS''). We adopted Form 40-F pursuant to the 
Exchange Act in order to permit qualified Canadian issuers to prepare 
their Exchange Act annual reports and registration statements based 
primarily in accordance with Canadian requirements.
    Form 6-K is used by a foreign private issuer to report material 
information that it:

[[Page 1403]]

     Makes or is required to make public under the laws of the 
jurisdiction of its incorporation, domicile or organization (its ``home 
country'');
     Files or is required to file with its home country stock 
exchange that is made public by that exchange; or
     Distributes or is required to distribute to its security 
holders.

A foreign private issuer may attach annual reports to security holders, 
statutory reports, press releases and other documents as exhibits or 
attachments to the Form 6-K. We adopted Form 6-K under the Exchange Act 
in order to keep investors informed on an ongoing basis about foreign 
private issuers that have registered securities with the Commission.
    As reproposed, new Form 15F is the form that a foreign private 
issuer would have to file when terminating its Exchange Act reporting 
obligations under new Exchange Act Rule 12h-6. Form 15F would require a 
filer to disclose information that would help investors understand the 
foreign private issuer's decision to terminate its Exchange Act 
reporting obligations and assist Commission staff in assessing whether 
the Form 15F filer is eligible to terminate its Exchange Act reporting 
obligations pursuant to Rule 12h-6.
    Exchange Act Rule 12g3-2 is an exemptive rule that, under paragraph 
(b) of that rule, provides an exemption from Exchange Act section 12(g) 
registration for a foreign private issuer that, in addition to 
satisfying other requirements, submits copies of its material home 
country documents to the Commission on an ongoing basis. We adopted 
paragraph (b) of Rule 12g3-2 in order to provide information for U.S. 
investors concerning foreign private issuers with limited securities 
trading in U.S. capital markets.
    The hours and costs associated with preparing, filing and sending 
Forms 20-F, 40-F, 6-K and 15F, and making submissions under Exchange 
Act Rule 12g3-2(b) constitute reporting and cost burdens imposed by 
those collections of information. We based our estimates of the effects 
that the reproposed rule amendments would have on those collections of 
information primarily on our review of the most recently completed PRA 
submissions for Forms 20-F, 40-F, and 6-K, and for submissions under 
Rule 12g3-2(b), on the particular requirements for those forms and 
submissions, and on relevant information, for example, concerning 
comparative trading volume for numerous filers of those forms.
    Reproposed Rule 12h-6 would permit a foreign private issuer to 
terminate its Exchange Act reporting obligations, including the 
obligation to file an annual report on Form 20-F or 40-F and the 
obligation to submit interim Form 6-K reports, after filing a Form 15F. 
Reproposed Rule 12h-6 and the accompanying rule amendments would also 
enable a foreign private issuer to claim the Rule 12g3-2(b) exemption 
immediately upon the effectiveness of its termination of reporting 
pursuant to the reproposed, new exit rule, and to publish copies of its 
home country documents required by Rule 12g3-2(b) on its Internet Web 
site instead of submitting them in paper to the Commission. We have 
based the annual burden and cost estimates of the adopted rule 
amendments on Forms 20-F, 40-F, 6-K and 15F, and on the home country 
submissions required under Rule 12g3-2(b), 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 or 40-F report or Form 
15F;
     Outside firms, including legal counsel, accountants and 
other advisors, incur or will incur 75% of the burden required to 
produce each Form 20-F or 40-F report or Form 15F at an average cost of 
$400 per hour;
     A foreign private issuer incurs or will incur 75% of the 
annual burden required to produce each Form 6-K report and Rule 12g3-
2(b) submission, not including English translation work, and 25% of the 
annual burden required to perform the English translation work for Form 
6-K reports and Rule 12g3-2(b) submissions; and
     Outside firms, including legal counsel, accountants and 
other advisors, incur or will incur 25% of the burden required to 
produce each Form 6-K report and Rule 12g3-2(b) submission, not 
including English translation work, at an average cost of $400 per 
hour, and 75% of the annual burden resulting from the English 
translation work for Form 6-K reports and Rule 12g3-2(b) submissions, 
at an average cost of $125 per hour.\135\
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    \135\ We relied on most of these estimates and assumptions for 
the proposed rulemaking. However, at the original proposing stage, 
we used an estimated hourly rate of $300 for work performed by an 
outside firm, not including English translation work. We recently 
increased the estimated outside firm rate to $400/hour after 
consulting with several private law firms. We have used the $400/
hour rate for outside firms in this reproposing rulemaking.
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    As was the case with the originally proposed rule amendments, the 
estimated effects of the reproposed rule amendments reflect the initial 
phase-in period of the Exchange Act termination process under new Rule 
12h-6 and Form 15F during the first year of use. We expect that most of 
these estimated effects would occur on a one-time, rather than a 
recurring, basis. While we expect that some issuers would terminate 
their Exchange Act reporting under Rule 12h-6 and file Form 15F in 
subsequent years, we do not expect the resulting burdens and costs to 
be of the same magnitude as the burdens and costs currently expected 
during the first year. Moreover, we expect that, over time the number 
of foreign private issuers that are encouraged to enter the Exchange 
Act reporting system as a result of the reproposed rule amendments 
would increase so that, on an annual basis, the number of foreign 
companies entering the Exchange Act reporting regime would exceed the 
number exiting that regime.
    We published a notice requesting comment on the collection of 
information requirements in the Original Proposing Release and 
submitted these requirements to the Office of Management and Budget 
(``OMB'') for review in accordance with the PRA.\136\ OMB subsequently 
approved the proposed requirements without change. As discussed in Part 
II above, we received several comment letters regarding the proposed 
rule amendments, although none addressed their estimated effects on the 
collection of information requirements. We have revised proposed Rule 
12h-6 and the accompanying proposed rule amendments in response to 
these comments. Because of these changes, we have revised the estimated 
reporting and cost burdens of the reproposed rule amendments, as 
discussed below.
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    \136\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
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A. Form 20-F

    During the first year of effectiveness of reproposed Rule 12h-6, we 
estimate that as many as 25% of Form 20-F filers could terminate their 
Exchange Act reporting obligations under the new rule, compared to the 
15% previously estimated under the earlier, proposed rule 
amendments.\137\ However, we continue to believe that Rule 12h-6 would 
encourage some foreign companies to enter the Exchange Act

[[Page 1404]]

registration and reporting regime for the first time. Consequently, 
during the first effective year of Rule 12h-6, the number of Form 20-F 
annual reports filed could increase by 5%, leading to a net decrease of 
20% for Form 20-Fs filed over this same period. This net decrease would 
cause:
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    \137\ This estimate has increased due to a number of revisions 
to the proposed rule, which should enable more foreign private 
issuers to qualify for termination of Exchange Act reporting under 
reproposed Rule 12h-6 than under the proposed rule. A review by the 
Commission's Office of Economic Analysis of trading volume data on a 
sample of foreign Exchange Act reporting companies that filed Form 
20-F during 2004 suggests that approximately 30% of filers would 
meet the U.S. trading volume threshold of the reproposed rule. That 
percentage may vary by region.
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     The number of Form 20-Fs filed to decrease to 880, which 
is 110 less than the 990 estimated under the originally proposed rule; 
\138\
---------------------------------------------------------------------------

    \138\ 1,100 Form 20-Fs filed annually (prior to this rulemaking) 
x .20 = 220; 1,100--220 = 880 Form 20-Fs filed annually.
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     The total number of burden hours required to produce Form 
20-F \139\ to decrease to 2,314,400 total hours, which is 289,300 hours 
less than the decrease to 2,603,700 total hours estimated under the 
originally proposed rule; \140\
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    \139\ As in the Original Proposing Release, we estimate that a 
foreign private issuer requires on average 2,630 hours to produce 
each Form 20-F.
    \140\ 880 Form 20-Fs filed annually x 2,630 hours per Form 20-F 
= 2,314,400 hours.
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     The total number of burden hours required by foreign 
private issuers to produce Form 20-F to decrease to 578,600 total 
hours, which is 72,325 hours less than the decrease to 650,925 total 
hours estimated under the orginally proposed rule; \141\ and
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    \141\ 880 Form 20-Fs x 2,630 hours per Form 20-F x .25 = 578,600 
hours. Thus, we estimate that, during the first year of 
effectiveness of Rule 12h-6, foreign private issuers could incur a 
reduction of 144,650 hours in the number of burden hours required to 
produce Form 20-F. 220 Form 20-Fs x 2,630 hrs x .25 = 144,650 hours. 
Using an estimated hourly rate of $175 for in-house work, foreign 
private issuers could incur Form 20-F cost savings of $25,313,750 
during Rule 12h-6's first year of effectiveness. 144,650 hrs. x 
$175/hr. = $25,313,750.
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     The cost incurred by outside firms to produce Form 20-F to 
total $694,320,000,\142\ which is $108,487,500 more than the 
$585,832,500 estimated under the originally proposed rule.\143\
---------------------------------------------------------------------------

    \142\ 880 Form 20-Fs x 2,630 hours x .75 x $400/hour = 
$694,320,000. The $108,487,500 increase reflects the increase in the 
estimated outside firm hourly rate from $300 to $400.
    \143\ We further estimate cost savings of $173,580,000 regarding 
outside firms' production of Form 20-Fs during Rule 12h-6's first 
year of effectiveness. 220 Form 20-Fs x 2,630 hrs. x .75 x $400/hr. 
= $173,580,000. Thus, during the first year of its effectiveness, 
Rule 12h-6 could result in total estimated Form 20-F cost savings of 
$198,893,750. $25,313,750 + $173,580,000 = $198,893,750.
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B. Form 40-F

    During the first year of effectiveness of reproposed Rule 12h-6, we 
estimate that as many as 10% of Form 40-F filers could terminate their 
Exchange Act reporting obligations under the new rule, which is the 
same percentage previously estimated under the originally proposed rule 
amendments.\144\ However, the reproposed rule could encourage some 
foreign companies to enter the Exchange Act registration and reporting 
regime for the first time, including some that would be eligible to use 
the MJDS forms, including the Form 40-F annual report. Consequently, 
over this same period, the number of Form 40-F annual reports filed 
could increase by approximately 3%, resulting in a net decrease of 7% 
for Form 40-Fs filed over this same period.\145\ This net decrease 
would cause:
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    \144\ We do not expect the expanded scope of reproposed Rule 
12h-6 to have as great an effect on MJDS filers as other foreign 
reporting companies since, typically, the percentage of an MJDS 
filer's shares held by U.S. residents and the U.S. trading volume 
relating to those shares is significant. Moreover, because of their 
close proximity to U.S. capital markets, we believe MJDS filers are 
less likely to seek to terminate their Exchange Act reporting 
obligations than other foreign private issuers. Accordingly, based 
on current experience, we expect no more than 10% of Form 40-F 
filers would terminate their Exchange Act reporting obligations 
under reproposed Rule 12h-6.
    \145\ This is the same percentage previously estimated under the 
originally proposed rule amendments.
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     The number of Form 40-Fs filed to total 125; \146\
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    \146\ 134 Form 40-Fs filed annually (prior to this rulemaking) x 
.07 = 9; 134-9 = 125 Form 40-Fs filed annually.
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     The number of burden hours required to produce Form 40-F 
\147\ to total 53,375 total hours; \148\
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    \147\ As in the Original Proposing Release, we estimate that it 
takes 427 hours on average to produce a Form 40-F report.
    \148\ 125 Form 40-Fs filed annually x 427 hours per Form 40-F = 
53,375 hours.
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     The number of burden hours required by foreign private 
issuers to produce Form 40-F to total 13,344 hours; \149\ and
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    \149\ 125 Form 40-Fs filed annually x 427 hours per Form 40-F x 
.25 = 13,344 hours. Thus, we estimate that, during the first year of 
effectiveness of reproposed Rule 12h-6, foreign private issuers 
could incur a reduction of 961 hours in the number of burden hours 
required to produce Form 40-F. 9 Form 40-Fs x 427 hrs. x .25 x = 961 
hrs. This could result in estimated Form 40-F cost savings for 
foreign private issuers of $168,175. 961 hrs. x $175/hr. = $168,175.
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     The cost incurred by outside firms to produce Form 40-F to 
total $16,012,500, which is $4,003,125 \150\ more than the $12,009,375 
estimated under the originally proposed rule.\151\
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    \150\ The $4,003,125 increase results from an increase in the 
estimated outside firm hourly rate from $300 to $400.
    \151\ 125 Form 40-Fs filed annually x 427 hours per Form 40-F x 
.75 x $400/hour = $16,012,500. This estimate corresponds to 
estimated cost savings of $1,152,900 in connection with outside 
firms' production of Form 40-F during reproposed Rule 12h-6's first 
year of effectiveness. 9 x 427 hrs. x .75 x $400/hr. = $1,152,900. 
Thus, during the first year of its effectiveness, Rule 12h-6 could 
result in estimated total Form 40-F cost savings of $168,175 + 
$1,152,900 = $1,321,075.
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C. Form 6-K

    During the first year of effectiveness of reproposed Rule 12h-6, we 
estimate that as many as 23% of foreign private issuers that furnish 
Form 6-K reports could terminate their Exchange Act reporting 
obligations under the new rule,\152\ compared to the 14% previously 
estimated under the originally proposed rule amendments. However, the 
reproposed rule could encourage some foreign companies to enter the 
Exchange Act registration and reporting regime for the first time, 
including those that would furnish Form 6-K reports. Consequently, over 
this same period, the number of Form 6-K reports furnished could 
increase by as much as 5%,\153\ resulting in a net decrease of 18% for 
Form 6-Ks furnished over this same period. This net decrease would 
cause:
---------------------------------------------------------------------------

    \152\ This estimate is based on the estimated number of Form 20-
F and Form 40-F filers that are expected to terminate their Exchange 
Act reporting obligations under reproposed Rule 12h-6. 1,100 Form 
20-Fs x .25 = 275; 134 Form 40-Fs x .10 = 13; 288 = .23 x 1,234.
    \153\ This estimate is based on the estimated number of foreign 
private issuers that are expected to enter the Exchange Act 
reporting regime and file Form 20-Fs or Form 40-Fs as a result of 
this reproposed rulemaking during the first year of effectiveness. 
1,100 Form 20-Fs x .05 = 55; 134 Form 40-Fs x .03 = 4; 59 = .05 x 
1,234.
---------------------------------------------------------------------------

     The number of Form 6-K reports furnished to decrease to 
12,022, which is 1,320 less than the 13,342 estimated under the 
originally proposed rule;\154 \
---------------------------------------------------------------------------

    \154\ 14,661 Form 6-K reports x .18 = 2,639; 14,661-2,639 = 
12,022 Form 6-K reports.
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     The total number of burden hours required to produce the 
Form 6-Ks \155\ to decrease to 104,591 total hours,\156\ which is 
12,054 hours less than the decrease to 116,645 total hours estimated 
under the originally proposed rule;
---------------------------------------------------------------------------

    \155\ In the Original Proposing Release, we estimated that, 
prior to this rulemaking, it took a total of 127,197 annual burden 
hours to produce the 14,661 Form 6-Ks, or approximately 8.7 hours 
per Form 6-K (for work performed by foreign private issuers and 
outside firms). We continue to use this 8.7 hour estimate for the 
reproposed rule amendments.
    \156\ 12,022 Form 6-K reports x 8.7 hours = 104,591 hours.
---------------------------------------------------------------------------

     The total number of burden hours required by foreign 
private issuers to produce Form 6-K \157\ to decrease to 65,369 
hours,\158\ which is 17,572 hours

[[Page 1405]]

less than the decrease to 82,941 total hours estimated under the 
originally proposed rule;\159\ and
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    \157\ In the Original Proposing Release, we estimated that the 
amount of time required to translate foreign language materials into 
English constitutes approximately 8% of the total hours required to 
produce Form 6-K. We have revised this estimate to 25% based on 
updated information provided by financial printer representatives.
    \158\ 104,591 hours x .25 = 26,148 hours for English translation 
work; 104,591 hours-26,148 hours = 78,443 hours for non-English 
translation work; 78,443 hours x .75 = 58,832 hours for non-English 
translation work performed by foreign private issuers; 26,148 hours 
x .25 = 6,537 hours of English translation work performed by foreign 
private issuers; 58,832 hours + 6,537 hours = 65,369 total hours for 
Form 6-K work performed by foreign private issuers, or 5.4 hours for 
foreign private issuer work per Form 6-K.
    \159\ We further estimate that, during the first year of 
effectiveness of reproposed Rule 12h-6, foreign private issuers 
could incur a reduction of 14,349 hours in the number of burden 
hours required to produce Form 6-K. 2,639 Form 6-Ks x 8.7 hours = 
22,959 hours; 22,959 hours x .25 = 5,740 hours of English 
translation work; 5,740 hours x .25 = 1,435 hours of English 
translation work for foreign private issuers; 22,959 x .75 = 17,219 
hours of non-English translation work; 17,219 x .75 = 12,914 hours 
of non-English translation work for foreign private issuers; 1,435 + 
12,914 = 14,349 hours. This could result in estimated Form 6-K cost 
savings of $2,511,075 for foreign private issuers during the first 
year of reproposed Rule 12h-6's effectiveness. 14,349 hrs. x $175/
hr. = $2,511,075.
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     The cost incurred by outside firms to produce Form 6-K to 
total $10,295,775,\160\ which is $2,078,475 more than the $8,217,300 
estimated under the originally proposed rule.\161\
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    \160\ 78,443 hours x .25 = 19,611 hours x $400/hour = $7,844,400 
for non-translation work; 26,148 hours x .75 = 19,611 hours x $125/
hour = $2,451,375 for English translation work; $7,844,400 + 
$2,451,375 = $10,295,775 for total work performed by outside firms. 
The $2,078,475 increase reflects the increase in the estimated 
outside firm hourly rate from $300 to $400.and the increase in the 
estimated outside firm rate for English translation work from $75 to 
$125/hour based on current information provided by financial printer 
representatives.
    \161\ This estimate corresponds to estimated cost savings of 
$2,260,025 in connection with outside firms' production of Form 6-K 
during Rule 12h-6's first year of effectiveness. 5,740 hrs. x .75 x 
$125/hour = $538,125 for English translation work; 17,219 x .25 x 
$400/hour = $1,721,900 for non-English translation work. $538,125 + 
$1,721,900 = $2,260,025 in Form 6-K cost savings for outside firms. 
Thus, Rule 12h-6 could result in total estimated Form 6-K cost 
savings of $4,771,100. $2,511,075 + $2,260,025 = $4,771,100.
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D. Form 15F

    During the first year of effectiveness of reproposed Rule 12h-6, we 
estimate that as many as 351 foreign private issuers \162\ could file a 
Form 15F to terminate their Exchange Act reporting obligations compared 
to the 178 previously estimated under the originally proposed rule 
amendments. This increase in the estimated number of Form 15F filers 
could cause:
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    \162\ We derived this estimate from the number of Form 20-F 
filers (275) and Form 40-F filers (13) estimated to elect to 
terminate their Exchange Act reporting obligations under reproposed 
Rule 12h-6 during the first year of the rule's effectiveness. We 
then added to this sum (288) the number of prior Form 15 filers (63) 
estimated to file a Form 15F during the first year of reproposed 
Rule 12h-6's effectiveness in order to make their Form 15 
termination or suspension of reporting obligations. The latter 
number is based on the approximate number of foreign private issuers 
that filed a Form 15 from 2003 through the present.
---------------------------------------------------------------------------

     The number of burden hours required to produce Form 15F 
\163\ to total 10,530 hours,\164\ which is 5,190 hours more than the 
5,340 hours estimated under the originally proposed rule amendments;
---------------------------------------------------------------------------

    \163\ In the Original Proposing Release, we estimated that the 
production of each Form 15F would require 30 hours. Although we have 
revised some aspects of the originally proposed Form 15F, we do not 
believe these changes are significant enough to affect materially 
this 30 hour estimate. Therefore, we continue to use this estimate 
for the reproposed rule amendments.
    \164\ 351 Form 15Fs x 30 = 10,530 hours.
---------------------------------------------------------------------------

     Foreign private issuers to incur a total of 2,633 hours to 
produce Form 15F,\165\ which is 1,298 hours more than the 1,335 hours 
estimated under the originally proposed rule amendments; and
---------------------------------------------------------------------------

    \165\ 10,530 hours x .25 = 2,633 hours. This could result in 
estimated Form 15F costs for foreign private issuers of $460,775 
during reproposed Rule 12h-6's first year of effectiveness. 2,633 
hrs. x $175 = $460,775.
---------------------------------------------------------------------------

     Outside firms to incur a total cost of $3,159,200 to 
produce Form 15F,\166\ which is $1,174,700 more than the $1,984,500 
estimated under the originally proposed rule amendments.\167\
---------------------------------------------------------------------------

    \166\ 10,530 hours x .75 = 7,898 hours; 7,898 hours x $400/hour 
= $3,159,200. The $3,159,200 increase reflects the increase in the 
number of estimated Form 15F filers and the increase in the 
estimated outside firm hourly rate from $300 to $400.
    \167\ Thus, reproposed Rule 12h-6 could result in total 
estimated Form 15F costs of $3,619,975 during its first year of 
effectiveness. $460,775 + $3,159,200 = $3,619,975.
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E. Rule 12g3-2(b) Submissions

    We estimate that 685 foreign private issuers currently have 
obtained the Rule 12g3-2(b) exemption.\168\ In addition, we estimate 
that each Rule 12g3-2(b) exempt issuer currently makes 12 Rule 12g3-
2(b) submissions per year for a total of 8,220 Rule 12g3-2(b) 
submissions. We further estimate that it takes a total of 32,880 annual 
burden hours, or 4 annual burden hours per submission (for work 
performed by foreign private issuers and outside firms), to produce the 
8,220 Rule 12g3-2(b) submissions.\169\
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    \168\ This estimate is based on Commission staff's most recent 
annual review of the number of current Rule 12g3-2(b) exempt 
companies, which will be available soon on our Internet Web site at 
http://www.sec.gov/divisions/corpfin.shtml.

    \169\ These estimates represent an adjustment of 31,080 hours 
from the 1,800 total hours previously reported for Rule 12g3-2(b) 
submissions. As part of this rulemaking, we have re-evaluated the 
number of foreign private issuers that currently claim the Rule 
12g3-2(b) exemption, the number of Rule 12g3-2(b) submissions made 
by them, and the number of burden hours required for their 
production, in addition to assessing the effects on Rule 12g3-2(b) 
submissions expected to result from adoption of the final rule 
amendments. We believe these estimates more accurately reflect the 
current burden hours required for the collections of information 
submitted under Rule 12g3-2(b).
---------------------------------------------------------------------------

    During the first year of effectiveness of reproposed Rule 12h-6, we 
estimate that as many as 351 foreign private issuers could claim the 
Rule 12g3-2(b) exemption immediately upon the effectiveness of their 
termination of reporting under reproposed Rule 12h-6.\170\ This 
increase in the number of Rule 12g3-2(b) exempt issuers would cause:
---------------------------------------------------------------------------

    \170\ This amount includes the estimated 288 Form 20-F and 40-F 
filers expected to terminate their Exchange Act reporting 
obligations under reproposed Rule 12h-6 as well as the estimated 63 
prior Form 15 filers expected to file a Form 15F to make their prior 
termination or suspension of reporting under Rule 12h-6.
---------------------------------------------------------------------------

     The number of issuers claiming the Rule 12g3-2(b) 
exemption to total 1,036;
     The number of Rule 12g3-2(b) submissions made annually to 
total 12,432;
     The number of annual burden hours required to produce 
these Rule 12g3-2(b) submissions to total 49,728 hours;
     Foreign private issuers to incur a total of 31,080 annual 
burden hours to produce these Rule 12g3-2(b) submissions, or 2.5 annual 
burden hours per submission;\171\ and
---------------------------------------------------------------------------

    \171\ Because the home country document submission requirement 
under Rule 12g3-2(b) is similar to the home country document 
submission requirement under Form 6-K, we have used the same 
assumptions regarding the English and non-English translation work 
required under Rule 12g3-2(b) that we adopted for Form 6-K 
submissions. Accordingly: 49,728 hours x .25 = 12,432 total annual 
burden hours for English translation work; 49,728-12,432 = 37,296 
total annual burden hours required for non-English translation work; 
37,296 hours x .75 = 27,972 total annual burden hours incurred by 
foreign private issuers for non-English translation work; 12,432 
hours x .25 = 3,108 total annual hours incurred by foreign private 
issuers for English translation work; 27,972 + 3,108 = 31,080 total 
annual burden hours incurred by foreign private issuers for Rule 
12g3-2(b) submissions, or 2.5 annual burden hours per submission. Of 
the 31,080 hours, 10,530 hours would result from adoption of the 
reproposed rules and 20,550 hours represents an adjustment from the 
previous PRA estimates for Rule 12g3-2 submissions.
---------------------------------------------------------------------------

     Outside firms to incur a total cost of $4,909,275 \172 \to 
produce the Rule 12g3-2(b) submissions.\173\
---------------------------------------------------------------------------

    \172\ 49,728 hours x .25 = 12,432 hours for English translation 
work; 12,432 hours x .75 = 9,324 hours; 9,324 hours x $125 = 
$1,165,500 for English translation work; 49,728 hours -12,432 hours 
= 37,296 hours for non-English translation work; 37,296 hours x .25 
= 9,324 hours; 9,324 hours x $400 = $3,729,600 for non-English 
translation work; $1,165,500 + $3,729,600 = $4,895,100 for total 
work performed by outside firms. Of that total amount, $1,658,475 
would result from adoption of the reproposed rules and $3,236,625 
constitutes an adjustment from the previous PRA estimates for Rule 
12g3-2 submissions.
    \173\ We further estimate that reproposed Rule 12h-6 and the 
accompanying rule amendments could result in total estimated Rule 
12g3-2(b) costs of $3,501,225 during the first year of their 
effectiveness. 351 issuers x 12 submissions/issuer x 2.5 hrs./
submission = 10,530 hours; 10,530 hours x $175/hr. = $1,842,750 in 
Rule 12g3-2(b) submission costs for foreign private issuers. For 
outside firm costs: 351 issuers x 12 submissions/issuer x 4 hrs./
submission = 16,848 hours; 16,848 x .25 = 4,212 hours of English 
translation work; 4,212 x .75 x $125 = $394,875 of English 
translation costs for outside firms. 16,848 hours x .75 = 12,636 
hours of non-English translation work; 12,636 x .25 x $400 = 
$1,263,600 of non-English translation costs for outside firms. 
$394,875 + $1,263,600 = $1,658,475 in total Rule 12g3-2(b) 
submission costs for outside firms. $1,842,750 + $1,658,475 = 
$3,501,225 in total estimated Rule 12g3-2(b) costs.

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[[Page 1406]]

Comment Solicited
    We solicit comment on the expected effects of reproposed Rule 12h-6 
and the accompanying reproposed rule amendments on Form 20-F, Form 40-
F, Form 6-K and Rule 12g3-2(b) submissions and on the expected effects 
of reproposed Form 15F under the PRA. In particular, we solicit comment 
on:
     The extent to which foreign private issuers would respond 
to reproposed Rule 12h-6 by electing to file Form 15F to terminate 
their registration and reporting in the U.S.;
     How many foreign private issuers would join the Exchange 
Act registration and reporting regime for the first time as a result of 
the reproposed rule;
     How accurate are our burden hour and cost estimates for 
Forms 20-F, 40-F, and 6-K, and Rule 12g3-2(b) submissions expected to 
result from the reproposed rule amendments;
     How accurate are our burden hour and cost estimates for 
reproposed Form 15F; and
     Whether most of the effects of reproposed Rule 12h-6 would 
occur during the first year, as expected, or over a longer period, for 
example, during the first two or three years.
    We further solicit comment in order to:
     Evaluate whether the reproposed collections of information 
are necessary for the proper performance of the functions of the 
Commission, including whether the information will have practical 
utility;
     Determine whether there are ways to enhance the quality, 
utility, and clarity of the information to be collected;
     Evaluate whether there are ways to minimize the burden of 
the collections of information on those who respond, including through 
the use of automated collection techniques or other forms of 
information technology; and
     Evaluate whether the reproposed rule amendments will have 
any effects on any other collections of information not previously 
identified in this section.
    Any member of the public may direct to us any comments concerning 
these burden and cost estimates and any suggestions for reducing the 
burdens and costs. Persons who desire to submit comments on the 
collections of information requirements should direct their comments to 
the OMB, Attention: Desk Officer for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs, Washington, 
DC 20503, and send a copy of the comments to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303, with reference to File No. S7-12-05. 
Requests for materials submitted to the OMB by us with regard to these 
collections of information should be in writing, refer to File No. S7-
12-05, and be submitted to the Securities and Exchange Commission, 
Records Management, Office of Filings and Information Services, 100 F 
Street, NE., Washington, DC 20549. Because the OMB is required to make 
a decision concerning the collections of information between 30 and 60 
days after publication, your comments are best assured of having their 
full effect if the OMB receives them within 30 days of publication.

IV. Cost-Benefit Analysis

A. Expected Benefits

    Reproposed Rule 12h-6 and the accompanying rule amendments would 
benefit U.S. investors to the extent that they remove a possible 
disincentive for foreign companies that are not currently Exchange Act 
reporting companies to register their equity and debt securities with 
the Commission. In response to foreign companies' concerns about 
Exchange Act reporting and other obligations, these rules would fine-
tune the criteria by which a foreign company may terminate those 
obligations. In so doing, the reproposed rule amendments should over 
time remove an impediment to foreign company access and participation 
in U.S. public capital markets while still providing U.S. investors 
with the protections afforded by our Exchange Act reporting regime.
    The reproposed rule amendments should remove a disincentive for 
foreign firms to enter our Exchange Act reporting regime by lowering 
the cost of exiting from that regime. Investors are expected to benefit 
from the amendments by being able to purchase shares in foreign firms 
that have been registered with the Commission and that, therefore, 
provide a high level of investor protection. In addition, U.S. 
investors may incur lower transaction costs when trading a foreign 
company's shares on a U.S. exchange relative to a foreign exchange.
    To remove a disincentive for foreign companies to enter U.S. public 
capital markets, the reproposed rule amendments would benefit U.S. 
investors by enabling a foreign Exchange Act reporting company to lower 
its costs of compliance in connection with Exchange Act deregistration. 
This reduction in the cost of compliance would directly benefit both 
foreign companies and their investors, including those resident in the 
United States.
    The reproposed rule amendments would result in foreign private 
issuers incurring lower costs of Exchange Act compliance in four 
possible ways. First, rather than require a foreign private issuer to 
determine the number of its U.S. holders, as is the case under the 
current exit rules, reproposed Rule 12h-6 would enable a foreign 
private issuer to rely solely on trading volume data regarding its 
securities in the United States and its primary trading market when 
determining whether it may terminate its Exchange Act reporting 
obligations. Because trading volume data is more easily obtainable than 
information regarding its U.S. shareholders, the reproposed rule should 
lower the costs of Exchange Act termination for foreign private 
issuers.
    Second, reproposed Rule 12h-6 would allow a foreign firm to 
terminate its Exchange Act reporting obligations regarding a class of 
equity securities and immediately obtain the Rule 12g3-2(b) exemption. 
Accordingly, such a terminating foreign private issuer would be able to 
avoid the costs associated with continued annual verification that its 
number of holders of record remains below 300.
    Third, the reproposed rule would permit an issuer to rely on the 
assistance of an independent information services provider when 
determining whether it falls below the 300 U.S. holder standard. The 
option to hire an independent information services provider may be a 
more efficient and cost-effective mechanism to make that determination. 
Moreover, a foreign company may save costs when assessing its 
eligibility to terminate its registration and reporting under the 300 
record holder provision of reproposed Rule 12h-6, since the rule would 
limit the number of jurisdictions in which a foreign private issuer 
must search for the amount of securities represented by accounts of 
customers resident in the United States held by brokers, dealers, banks 
and other nominees. The current rules require a foreign private issuer 
to conduct a worldwide search for such U.S. customer accounts.

[[Page 1407]]

    Fourth, once having terminated its reporting obligations under 
reproposed Rule 12h-6, a foreign company would no longer be required to 
incur costs associated with producing an Exchange Act annual report or 
interim Form 6-K reports.\174\ Based on estimates and assumptions used 
for the purpose of the Paperwork Reduction Act, these estimated cost 
savings could total approximately $200,000,000 for the first year of 
reproposed Rule 12h-6's effectiveness.\175\
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    \174\ We recognize that, as a result of terminating their 
Exchange Act reporting obligations under reproposed Rule 12h-6, 
foreign firms may accrue other cost savings that are not 
specifically quantified in this section. One such example is an 
investment in an internal control system in order to comply with the 
Sarbanes-Oxley Act.
    \175\ As discussed in Part III of this release, for the first 
year of reproposed Rule 12h-6's effectiveness, estimated cost 
savings in connection with Forms 20-F, 40-F and 6-K could amount to, 
respectively, $198,893,750, $1,321,075, and $4,771,100, for a total 
of $204,985,925.
---------------------------------------------------------------------------

B. Expected Costs

    Investors could incur costs from the reproposed rule amendments to 
the extent that currently registered foreign companies respond to the 
rule changes by terminating their Exchange Act registration and 
reporting obligations with respect to their equity and debt securities. 
If Exchange Act disclosure requirements provide more information or 
protection to U.S. or other investors than is provided in an issuer's 
primary trading market, then all investors, both U.S. and foreign, may 
suffer the costs of losing that information and protection upon 
Exchange Act termination.\176\ If this is the case, the announcement 
that a foreign firm is terminating its Exchange Act reporting may 
result in a loss of share value and the incurrence by investors of 
higher costs from trading in the firm's equity and debt securities.
---------------------------------------------------------------------------

    \176\ Conversely, in countries that have similar regulatory 
regimes and levels of investor protection, the impact of U.S. 
deregistration may be mitigated.
---------------------------------------------------------------------------

    There are costs associated with the filing of reproposed Form 15F, 
which is a requirement for a foreign private issuer that terminates its 
Exchange Act registration and reporting under Rule 12h-6.\177\ A 
foreign private issuer will also incur costs in connection with having 
to post on its Internet Web site in English its material home country 
documents required to maintain the Rule 12g3-2(b) exemption that it 
will have received upon the effectiveness of its termination of 
reporting under reproposed Rule 12h-6.\178\
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    \177\ As discussed in Part III of this release, based on 
estimates and assumptions adopted for the purpose of the Paperwork 
Reduction Act, these costs could total $3,619,975 during the first 
year of the reproposed form's use.
    \178\ As discussed in Part III of this release, based on 
estimates and assumptions adopted for the Paperwork Reduction Act, 
these resulting Rule 12g3-2(b) costs could amount to $3,501,225.
---------------------------------------------------------------------------

    We expect that reproposed Rule 12h-6 would enable some foreign 
registrants to avoid other recent U.S. regulation, such as the 
Sarbanes-Oxley Act.\179\ Investors would lose the benefits afforded by 
the Sarbanes-Oxley Act to the extent a current foreign registrant is 
not fully subject to that Act.
---------------------------------------------------------------------------

    \179\ 15 U.S.C. 7201 et seq.
---------------------------------------------------------------------------

    Some U.S. investors might seek to trade in the equity securities of 
a foreign company following its termination of Exchange Act reporting 
under reproposed Rule 12h-6. U.S. investors seeking to trade the former 
reporting company's securities in the U.S. may be forced to trade in 
over-the-counter markets such as the one administered by Pink Sheets, 
LLC, which could result in higher transaction costs than if the foreign 
company had continued to have a class of securities registered with the 
Commission.
    U.S. investors seeking to trade the former reporting company's 
securities in its primary trading market also could incur additional 
costs. For example, U.S. investors who held the securities in the form 
of ADRs could incur costs associated with the depositary's conversion 
of the ADRs into ordinary shares.\180\ Moreover, some U.S. investors 
could incur costs associated with finding and contracting with a new 
broker-dealer who is able to trade in the foreign reporting company's 
primary trading market. U.S. investors may face additional costs due to 
the cost of currency conversion and higher transaction costs trading 
the securities in a foreign market.
---------------------------------------------------------------------------

    \180\ A foreign company may terminate its ADR facility whether 
or not it is an Exchange Act registrant, and reproposed Rule 12h-6 
does not require the termination of ADR facilities. In fact, by 
granting foreign private issuers the Rule 12g3-2(b) exemption 
immediately upon their termination of reporting with regard to a 
class of equity securities, Rule 12h-6 would enable foreign private 
issuers to retain their ADR facilities as unlisted facilities 
following their termination of reporting under Rule 12h-6. As 
reproposed, Rule 12h-6 would require an issuer that has terminated a 
sponsored ADR facility to wait a year before it may file a Form 15F 
in reliance on the trading volume provision of reproposed Rule 12h-
6.
---------------------------------------------------------------------------

    Some investors who wish to make investment decisions regarding 
former Exchange Act reporting foreign companies also may incur costs to 
the extent that the information provided by such companies pursuant to 
any home country regulations is different from that which currently is 
required under the Exchange Act. Such investors could incur costs 
associated with hiring an attorney or investment adviser, to the extent 
that they have not already done so, to explain the material 
differences, if any, between a foreign company's home country reporting 
requirements, as reflected in its home country annual report posted on 
its Internet Web site, and Exchange Act reporting requirements.
Comment Solicited
    We solicit comment on the costs and benefits to U.S. and other 
investors, foreign private issuers, and others who may be affected by 
reproposed Rule12h-6, reproposed Form 15F and the associated reproposed 
rule amendments. We request your views on the costs and benefits 
described above as well as on any other costs and benefits that could 
result from adoption of the reproposed rules. We also request data to 
quantify the costs and value of the benefits identified. In particular, 
we solicit comment on:
     The number of current foreign private issuers that are 
expected to terminate their Exchange Act registration and reporting as 
a result of reproposed Rule 12h-6 and the accompanying reproposed rule 
amendments and the timing of such termination;
     The number of prospective foreign companies that are 
expected to join the Exchange Act reporting regime as a result of the 
reproposed rules and the timing of such intial registration and 
reporting; and
     How investors would be affected both directly and 
indirectly from the rule proposals, as discussed in this section.

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

    When adopting rules under the Exchange Act, Section 23(a)(2) of the 
Exchange Act \181\ requires us to consider the impact that any new rule 
would have on competition. Section 23(a)(2) also prohibits us from 
adopting any rule that would impose a burden on competition not 
necessary or appropriate in furtherance of the purposes of the Exchange 
Act. Furthermore, when engaging in rulemaking that requires us to 
consider or determine whether an action is necessary or appropriate in 
the public interest, Section 3(f) of the Exchange Act \182\ requires 
the Commission to

[[Page 1408]]

consider whether the action will promote efficiency, competition and 
capital formation.
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    \181\ 15 U.S.C. 78w(a)(2).
    \182\ 15 U.S.C. 78c(f).
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    In the Original Proposing Release, we considered proposed Rule 12h-
6 and the accompanying proposed rule amendments in light of the 
standards set forth in the above statutory sections. We solicited 
comment on whether, if adopted, proposed Rule 12h-6 and the other 
proposed rule amendments would result in any anti-competitive effects 
or promote efficiency, competition and capital formation. We further 
encouraged commenters to provide empirical data or other facts to 
support their views on any anti-competitive effects or any burdens on 
efficiency, competition or capital formation that might result from 
adoption of proposed Rule 12h-6 and the other proposed rule amendments.
    Although most commenters did not submit any empirical data to 
support their views, many commenters maintained that proposed Rule 12h-
6 would not achieve its intended purpose--to facilitate the exit from 
the Exchange Act reporting system of a foreign private issuer in which 
there is relatively little U.S. market interest and thereby remove a 
disincentive for other foreign companies to join that system. According 
to these commenters, because a significant number of foreign reporting 
companies would not benefit from the proposed new rules, other foreign 
companies would avoid registering their securities with the Commission 
out of concern that once an issuer became an Exchange Act reporting 
company, it would remain one indefinitely. Consequently, according to 
these commenters, contrary to the Commission's intention, the rule 
proposals would not promote competition and capital formation by 
foreign private issuers in the U.S. securities markets.
    In response to these concerns, we have revised the rule proposals 
in several respects, including proposing a provision that would enable 
a foreign registrant to terminate its Exchange Act reporting 
obligations based solely on trading volume data, which should be more 
easily obtainable than information regarding the number of a foreign 
registrant's U.S. holders or the percentage of shares held by such 
holders. We believe the reproposed rule amendments will provide a 
foreign reporting company with a more efficient option of exiting the 
Exchange Act reporting system when U.S. investor interest has become 
relatively scarce. In so doing, reproposed Rule 12h-6 and the other 
reproposed rule amendments should encourage foreign private issuers to 
register their equity and debt securities with the Commission by 
reassuring foreign private issuers that, should interest in the U.S. 
market for their securities decline sufficiently, they may exit the 
Exchange Act reporting system with little difficulty.
    By providing increased flexibility for foreign private issuers 
regarding our Exchange Act reporting system, the reproposed rule 
amendments should encourage foreign companies to participate in U.S. 
capital markets as Exchange Act reporting companies to the benefit of 
investors. In so doing, the reproposed rule amendments should foster 
increased competition between domestic and foreign firms for investors 
in U.S. capital markets.
    Moreover, by requiring a foreign private issuer that has terminated 
its Exchange Act reporting under reproposed Rule 12h-6 to publish its 
home country documents required under Exchange Act Rule 12g3-2(b) in 
English on its Internet Web site or through an electronic information 
delivery system that is generally available to the public in its 
primary trading market, the reproposed rules would help ensure that 
U.S. investors continue to have ready access to material information in 
English about the foreign private issuer.\183\ Thus, reproposed Rule 
12h-6 and the accompanying rule amendments should foster increased 
efficiency in the trading of the issuer's securities for U.S. investors 
following the issuer's termination of Exchange Act reporting.
---------------------------------------------------------------------------

    \183\ Similarly, by expanding the scope of proposed Rule 12h-6 
to permit prior Form 15 filers to terminate their Exchange Act 
reporting obligations under the reproposed, new exit rule and claim 
the Rule 12g3-2(b) exemption immediately upon such termination, the 
reproposed rules would help promote the availability of material 
home country information in English about those issuers for U.S. 
investors.
---------------------------------------------------------------------------

Comment Solicited

    We solicit comment on whether the reproposed rules would impose a 
burden on competition or whether they would promote efficiency, 
competition and capital formation. Commenters are requested to provide 
empirical data and other factual support for their views if possible.

VI. Regulatory Flexibility Act Certification

    The Securities and Exchange Commission hereby certifies, pursuant 
to 5 U.S.C. 605(b), that reproposed Rule 12h-6 and reproposed Form 15F 
under the Exchange Act, the reproposed amendments to Rules 12g3-2, 12g-
4 and 12h-3 under the Exchange Act, and the reproposed amendments to 
Rule 30-1 of its Delegation of Authority rules and Rule 101 of 
Regulation S-T, if adopted, would not have a significant economic 
impact on a substantial number of small entities for purposes of the 
Regulatory Flexibility Act. The reason for this certification is as 
follows.
    Reproposed Rule 12h-6, reproposed Form 15F and the accompanying 
reproposed rule amendments would permit the termination of Exchange Act 
reporting by a foreign private issuer regarding a class of equity 
securities under either Exchange Act section 12(g) or section 15(d) for 
which U.S. markets show relatively little interest. The reproposed 
rules would further permit a foreign private issuer that seeks 
termination of reporting regarding a class of equity or debt securities 
to also terminate its section 15(d) reporting obligations regarding a 
class of debt securities as long as it meets conditions similar to 
those currently required for suspending reporting obligations under 
section 15(d). The reproposed rule amendments would also automatically 
extend the Exchange Act Rule 12g3-2(b) exemption to a foreign private 
issuer that has terminated its Exchange Act reporting obligations with 
regard to a class of equity securities pursuant to reproposed Rule 12h-
6 on the condition that it publish material information required by its 
home country in English on its Internet Web site or through an 
electronic information delivery system that is generally available to 
the public in its primary trading market. The reproposed rule 
amendments would similarly extend an electronic publishing option to a 
foreign private issuer that has obtained the Rule12g3-2(b) exemption 
upon application and not under Rule 12h-6.
    Because reproposed Rule 12h-6 and the accompanying reproposed rule 
amendments would only apply to foreign private issuers, they would 
directly affect only foreign companies and not domestic companies. 
Similarly, reproposed Form 15F would only affect foreign companies 
since only foreign private issuers would be permitted to use this form.
    Based on an analysis of the language and legislative history of the 
Regulatory Flexibility Act, Congress did not intend that the Act apply 
to foreign issuers. Accordingly, the entities directly affected by the 
reproposed rule and form amendments will fall outside the scope of the 
Act. For this reason, reproposed Exchange Act Rule 12h-6, reproposed 
Form 15F, and the accompanying reproposed rule amendments should not 
have a significant economic impact on a substantial number of small 
entities.

[[Page 1409]]

    We encourage written comments regarding this certification. We 
request in particular that commenters describe the nature of any impact 
on small entities and provide empirical data to support the extent of 
the impact.

VII. Statutory Basis and Text of Proposed Rule Amendments

    We are reproposing the amendments to Rule 30-1 of Part 200, Rule 
101 of Regulation S-T, and Exchange Act Rules 12g3-2, 12g-4 and 12h-3, 
new Exchange Act Rule 12h-6 and new Exchange Act Form 15F under the 
authority in sections 6, 7, 10 and 19 of the Securities Act\184\ and 
sections 3(b), 12, 13, 23 and 36 of the Exchange Act.\185\
---------------------------------------------------------------------------

    \184\ 15 U.S.C. 77f, 77g, 77j, and 77s.
    \185\ 15 U.S.C. 78c, 78l, 78m, 78w, and 78mm.
---------------------------------------------------------------------------

List of Subjects

17 CFR Part 200

    Administrative practice and procedure, Authority delegations 
(Government agencies).

17 CFR Parts 232, 240 and 249

    Reporting and recordkeeping requirements, Securities.

Text of Proposed Rule Amendments

    For the reasons set out in the preamble, we propose to amend Title 
17, Chapter II of the Code of Federal Regulations as follows.

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND 
REQUESTS

    1. The general authority citation for part 200 is revised to read 
as follows:

    Authority: 15 U.S.C. 77s, 77o, 77sss, 78d, 78d-1, 78d-2, 78w, 
78ll(d), 78mm, 80a-37, 80b-11, and 7202, unless otherwise noted.
* * * * *
    2. Amend Sec.  200.30-1 by adding paragraph (e)(17) to read as 
follows:

Sec.  200.30-1  Delegation of authority to Director of Division of 
Corporation Finance.

* * * * *
    (e) * * *
    (17) At the request of a foreign private issuer, pursuant to Rule 
12h-6 (Sec.  240.12h-6 of this chapter), to accelerate the termination 
of the registration of a class of securities under section 12(g) of the 
Act (15 U.S.C. 78l(g)) or the duty to file reports under section 13(a) 
of the Act (15 U.S.C. 78m(a)) or section 15(d) of the Act (15 U.S.C. 
78o(d)).
* * * * *

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR 
ELECTRONIC FILINGS

    3. The general authority citation for part 232 is revised to read 
as follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77sss(a), 
78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll(d), 80a-8, 80a-29, 80a-
30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350.
* * * * *
    4. Amend Sec.  232.101 by:
    a. Removing the word ``and'' at the end of paragraph (a)(1)(x);
    b. Removing the period and adding ``; and'' at the end of paragraph 
(a)(1)(xi); and
    c. Adding paragraph (a)(1)(xii).
    The addition reads as follows:

Sec.  232.101  Mandated electronic submissions and exceptions.

    (a) * * *
    (1) * * *
    (xii) Forms 15 and 15F (Sec.  249.323 and Sec.  249.324 of this 
chapter).
* * * * *

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

    5. The general authority citation for part 240 is revised to read 
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.
* * * * *
    6. Amend Sec.  240.12g3-2 by revising paragraphs (d)(1) and (d)(2) 
and adding paragraphs (e) and (f) to read as follows:

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

* * * * *
    (d) * * *
    (1) Securities of a foreign private issuer that has or has had 
during the prior eighteen months any securities registered under 
section 12 of the Act or a reporting obligation (suspended or active) 
under section 15(d) of the Act (other than arising solely by virtue of 
the use of Form F-7, F-8, F-9, F-10 or F-80), except as provided by 
paragraph (e) of this section;
    (2) Securities of a foreign private issuer issued in a transaction 
(other than a transaction registered on Form F-8, F-9, F-10 or F-80) to 
acquire by merger, consolidation, exchange of securities or acquisition 
of assets, another issuer that had securities registered under section 
12 of the Act or a reporting obligation (suspended or active) under 
section 15(d) of the Act, except as provided by paragraph (e) of this 
section; and
* * * * *
    (e)(1) A foreign private issuer that has filed a Form 15F (Sec.  
249.324 of this chapter) pursuant to Sec.  240.12h-6 shall receive the 
exemption provided by paragraph (b) of this section for a class of 
equity securities immediately upon the effectiveness of the termination 
of registration of that class of securities under section 12(g) of the 
Act (15 U.S.C. 78l(g)) or the termination of the duty to file reports 
regarding that class of securities under section 15(d) of the Act (15 
U.S.C. 78o(d)), or both.
    (2) Notwithstanding any provision of Sec.  240.12g3-2(b), in order 
to satisfy the conditions of the Sec.  240.12g3-2(b) exemption received 
under this paragraph, the issuer shall publish in English the 
information required under paragraph (b)(1)(iii) of this section on its 
Internet Web site or through an electronic information delivery system 
generally available to the public in its primary trading market, rather 
than furnish that information to the Commission.
    (3) The Sec.  240.12g3-2(b) exemption received under this paragraph 
will remain in effect for as long as the foreign private issuer 
satisfies the electronic publication condition of paragraph (e)(2) of 
this section or until the issuer registers a class of securities under 
section 12 of the Act or incurs reporting obligations under section 
15(d) of the Act.
    (4) Notwithstanding the time period specified in Sec.  240.12g3-
2(d)(1), a foreign private issuer that filed a Form 15F solely with 
respect to a class of debt securities under section 15(d) of the Act 
(15 U.S.C. 78o(d)) may apply for the exemption provided by paragraph 
(b) of this section for a class of equity securities at any time 
following the effectiveness of its termination of reporting regarding 
the class of debt securities.

    Note 1 to Paragraph (e): 1. In order to maintain the Sec.  
240.12g3-2(b) exemption obtained under this paragraph, at a minimum, 
a foreign private issuer shall electronically publish English 
translations of the following documents required to be furnished 
under paragraph (b)(1)(iii) of this section if in a foreign 
language:
    a. Its annual report, including or accompanied by annual 
financial statements;
    b. Interim reports that include financial statements;

    c. Press releases; and
    d. All other communications and documents distributed directly 
to security holders of each class of securities to which the 
exemption relates.

[[Page 1410]]

    Note 2 to Paragraph (e): As used in paragraph (e)(2) of this 
section, primary trading market has the same meaning as under Sec.  
240.12h-6(e).

    Note 3 to Paragraph (e): A foreign private issuer that filed a 
Form 15F regarding a class of equity securities shall disclose in 
the Form 15F the address of its Internet Web site or that of the 
electronic information delivery system in its primary trading market 
on which it will publish the information required under paragraph 
(b)(1)(iii) of this section. An issuer need not update the Form 15F 
to reflect a change in that address.

    Note 4 to Paragraph (e): A foreign private issuer that filed a 
Form 15F solely with respect to a class of debt securities must 
provide the Commission with the address of its Internet Web site or 
that of the electronic information delivery system in its primary 
trading market when it applies for the exemption under Sec.  
240.12g3-2(b) regarding a class of equity securities.
    (f)(1) A foreign private issuer that, upon application to the 
Commission and not after filing a Form 15F, has obtained or will 
obtain the exemption under Sec.  240.12g3-2(b), may publish the 
information required under paragraph (b)(1)(iii) of this section on 
its Internet Web site or through an electronic information delivery 
system generally available to the public in its primary trading 
market, rather than furnish that information to the Commission, as 
long as it complies with the English translation requirements 
provided in paragraph (e) of this section.
    (2) Before a foreign private issuer may publish information 
electronically pursuant to this paragraph, it must provide the 
Commission with the address of its Internet Web site or that of the 
electronic information delivery system in its primary trading market 
in its application for the exemption under Sec.  240.12g3-2(b) or in 
an amendment to that application.

    7. Amend Sec.  240.12g-4 by:
    a. Removing the authority citations following the section; and
    b. Revising paragraph (a) to read as follows:

Sec.  240.12g-4  Certifications of termination of registration under 
section 12(g).

    (a) Termination of registration of a class of securities under 
section 12(g) of the Act (15 U.S.C. 78l(g)) shall take effect 90 days, 
or such shorter period as the Commission may determine, after the 
issuer certifies to the Commission on Form 15 (17 CFR 249.323) that the 
class of securities is held of record by:
    (1) Less than 300 persons; or
    (2) Less than 500 persons, where the total assets of the issuer 
have not exceeded $10 million on the last day of each of the issuer's 
most recent three fiscal years.
* * * * *
    8. Amend Sec.  240.12h-3 by:
    a. Removing the authority citations following the section;
    b. Adding the word ``and'' at the end of paragraph (b)(1)(ii);
    c. Removing paragraph (b)(2), including the undesignated paragraph;
    d. Redesignating paragraph (b)(3) as (b)(2);
    e. Revising the cite ``paragraphs (b)(1)(ii) and (2)(ii)'' to read 
``paragraph (b)(1)(ii)'' in paragraph (c); and
    f. Revising the phrase ``criteria (i) and (ii) in either paragraph 
(b)(1) or (2)'' to read ``either criteria (i) or (ii) of paragraph 
(b)(1)'' in paragraph (d).

    9. Add Sec.  240.12h-6 to read as follows:

Sec.  240.12h-6  Certification by a foreign private issuer regarding 
the termination of registration of a class of securities under section 
12(g) or the duty to file reports under section 13(a) or section 15(d).

    (a) A foreign private issuer may terminate the registration of a 
class of securities under section 12(g) of the Act (15 U.S.C. 78l(g)) 
or terminate the obligation under section 15(d) of the Act (15 U.S.C. 
78o(d)) to file or furnish reports required by section 13(a) of the Act 
(15 U.S.C. 78m(a)), or both, with respect to a class of equity 
securities, after certifying to the Commission on Form 15F (17 CFR 
249.324) that:
    (1) The foreign private issuer has had reporting obligations under 
section 13(a) or section 15(d) of the Act for at least the 12 months 
preceding the filing of the Form 15F, has filed or furnished all 
reports required for this period, and has filed at least one annual 
report pursuant to section 13(a) of the Act;
    (2) The foreign private issuer's securities have not been sold in 
the United States in a registered offering under the Securities Act of 
1933 (15 U.S.C. 77a et seq.) during the 12 months preceding the filing 
of the Form 15F, other than securities issued:
    (i) To the issuer's employees;
    (ii) By selling security holders in non-underwritten offerings;
    (iii) Upon the exercise of outstanding rights granted by the issuer 
if the rights are granted pro rata to all existing security holders of 
the class of the issuer's securities to which the rights attach;
    (iv) Pursuant to a dividend or interest reinvestment plan; or
    (v) Upon the conversion of outstanding convertible securities or 
upon the exercise of outstanding transferable warrants issued by the 
issuer;

    Note to Paragraph (a)(2): The exceptions in paragraphs 
(a)(2)(iii)-(v) do not apply to securities issued pursuant to a 
standby underwritten offering or other similar arrangement in the 
United States;

    (3) The foreign private issuer has maintained a listing of the 
subject class of securities for at least the 12 months preceding the 
filing of the Form 15F on an exchange in a foreign jurisdiction that, 
either singly or together with the trading of the same class of the 
issuer's securities in another foreign jurisdiction, constitutes the 
primary trading market for those securities; and
    (4)(i) The average daily trading volume of the subject class of 
securities in the United States during a recent 12-month period has 
been no greater than 5 percent of the average daily trading volume of 
that class of securities in the issuer's primary trading market during 
the same period; or
    (ii) On a date within 120 days before the filing date of the Form 
15F, a foreign private issuer's subject class of equity securities is 
either held of record by:
    (A) Less than 300 persons on a worldwide basis; or
    (B) Less than 300 persons resident in the United States.

    Note 1 to Paragraph (a)(4): If an issuer has delisted a class of 
equity securities from a national securities exchange or inter-
dealer quotation system in the United States, and at the time of 
delisting, the average daily trading volume of that class of 
securities in the United States exceeded 5 percent of the average 
daily trading volume of that class of securities in the issuer's 
primary trading market threshold for the preceding 12 months, the 
issuer must wait at least 12 months before it may file a Form 15F to 
terminate its section 13(a) or 15(d) reporting obligations in 
reliance on paragraph (a)(4)(i).

    Note 2 to Paragraph (a)(4): An issuer that has terminated a 
sponsored American Depositary Receipts facility must wait 12 months 
before it may file a Form 15F to terminate its section 13(a) or 
15(d) reporting obligations in reliance on paragraph (a)(4)(i).

    (b) A foreign private issuer may terminate its duty to file or 
furnish reports pursuant to section 13(a) or section 15(d) of the Act 
with respect to a class of debt securities after certifying to the 
Commission on Form 15F that:
    (1) The foreign private issuer has filed or furnished all reports 
required by section 13(a) or section 15(d) of the Act, including at 
least one annual report pursuant to section 13(a) of the Act; and
    (2) On a date within 120 days before the filing date of the Form 
15F, the class of debt securities is either held of record by:
    (i) Less than 300 persons on a worldwide basis; or
    (ii) Less than 300 persons resident in the United States.
    (c)(1) Following a merger, consolidation, exchange of securities, 
acquisition of assets or otherwise, a foreign private issuer that has 
succeeded to the reporting obligations under section 13(a) of the Act 
of another issuer pursuant to Sec.  240.12g-3, or to the reporting 
obligations of another issuer

[[Page 1411]]

under section 15(d) of the Act pursuant to Sec.  240.15d-5, may file a 
Form 15F to terminate those reporting obligations if:
    (i) Regarding a class of equity securities, the successor issuer 
meets the conditions under paragraphs (a)(1), (a)(3) and (a)(4) of this 
section; or
    (ii) Regarding a class of debt securities, the successor issuer 
meets the conditions under paragraph (b) of this section.
    (2) When determining whether it meets the prior reporting 
requirement under paragraph (a)(1) or paragraph (b)(1) of this section, 
a successor issuer may take into account the reporting history of the 
issuer whose reporting obligations it has assumed pursuant to Sec.  
240.12g-3 or Sec.  240.15d-5.
    (d) Counting method. When determining under this section the number 
of United States residents holding a foreign private issuer's equity or 
debt securities:
    (1)(i) Use the method for calculating record ownership Sec.  
240.12g3-2(a), except that you may limit your inquiry regarding the 
amount of securities represented by accounts of customers resident in 
the United States to brokers, dealers, banks and other nominees located 
in:
    (A) The United States;
    (B) The foreign private issuer's jurisdiction of incorporation, 
legal organization or establishment; and
    (C) The foreign private issuer's primary trading market, if 
different from the issuer's jurisdiction of incorporation, legal 
organization or establishment.
    (ii) If you aggregate the trading volume of the issuer's securities 
in two foreign jurisdictions for the purpose of complying with 
paragraph (a)(3) of this section, you must include both of those 
foreign jurisdictions when conducting your inquiry under paragraph 
(d)(1)(i) of this section.
    (2) If, after reasonable inquiry, you are unable without 
unreasonable effort to obtain information about the amount of 
securities represented by accounts of customers resident in the United 
States, for purposes of this section, you may assume that the customers 
are the residents of the jurisdiction in which the nominee has its 
principal place of business.
    (3) You must count securities as owned by United States holders 
when publicly filed reports of beneficial ownership or information that 
is otherwise provided to you indicates that the securities are held by 
United States residents.
    (4) When calculating under this section the number of your United 
States resident security holders, you may rely in good faith on the 
assistance of an independent information services provider that in the 
regular course of its business assists issuers in determining the 
number of, and collecting other information concerning, their security 
holders.
    (e) Definitions. For the purpose of this section:
    (1) Debt security means any security other than an equity security 
as defined under Sec.  240.3a11-1, including non-participatory 
preferred stock, which is defined as non-convertible capital stock, the 
holders of which are entitled to a preference in payment of dividends 
and in distribution of assets on liquidation, dissolution, or winding 
up of the issuer, but are not entitled to participate in residual 
earnings or assets of the issuer.
    (2) Employee has the same meaning as the definition of employee 
provided in Form S-8 (Sec.  239.16b).
    (3) Equity security has the same meaning as under Sec.  240.3a11-1.
    (4) Foreign private issuer has the same meaning as under Sec.  
240.3b-4.
    (5) Primary trading market means that:
    (i) At least 55 percent of the trading in a foreign private 
issuer's class of securities that is the subject of Form 15F took place 
in, on or through the facilities of a securities market in a single 
foreign jurisdiction or in no more than two foreign jurisdictions 
during a recent 12-month period; and
    (ii) If a foreign private issuer aggregates the trading of its 
subject class of securities in two foreign jurisdictions for the 
purpose of this section, the trading market for the issuer's securities 
in at least one of the two foreign jurisdictions must be larger than 
the United States trading market for the same class of the issuer's 
securities.
    (6) Recent 12-month period means a 12-calendar-month period that 
ended no more than 60 days before the filing date of the Form 15F.
    (f)(1) Suspension of a foreign private issuer's duty to file 
reports under section 13(a) or section 15(d) of the Act shall occur 
immediately upon filing the Form 15F with the Commission if filing 
pursuant to paragraph (a), (b) or (c) of this section. If there are no 
objections from the Commission, 90 days, or such shorter period as the 
Commission may determine, after the issuer has filed its Form 15F, the 
effectiveness of any of the following shall occur:
    (i) The termination of registration of a class of securities under 
section 12(g); and
    (ii) The termination of a foreign private issuer's duty to file 
reports under section 13(a) or section 15(d) of the Act.
    (2) If the Form 15F is subsequently withdrawn or denied, the issuer 
shall, within 60 days after the date of the withdrawal or denial, file 
with or submit to the Commission all reports that would have been 
required had the issuer not filed the Form 15F.
    (g) As a condition to termination of reporting under paragraph (a), 
(b) or (c) of this section, a foreign private issuer must, either 
before or on the date that it files its Form 15F, publish a notice in 
the United States that discloses its intent to terminate its reporting 
obligations under section 13(a) or section 15(d) of the Act or both. 
The issuer must publish the notice through a means reasonably designed 
to provide broad dissemination of the information to the public in the 
United States. The issuer must also submit a copy of the notice to the 
Commission, either under cover of a Form 6-K (17 CFR 249.306) before or 
at the time of filing of the Form 15F, or as an exhibit to the Form 
15F.
    (h)(1) A foreign private issuer that, before the effective date of 
this section, terminated the registration of a class of securities 
under section 12(g) of the Act or suspended its reporting obligations 
regarding a class of equity or debt securities under section 15(d) of 
the Act may file a Form 15F in order to:
    (i) Terminate under this section the registration of a class of 
equity securities that was the subject of a Form 15 (Sec.  249.323 of 
this chapter) filed by the issuer pursuant to Sec.  240.12g-4; or
    (ii) Terminate its reporting obligations under section 15(d) of the 
Act, which had been suspended by the terms of that section or by the 
issuer's filing of a Form 15 pursuant to Sec.  240.12h-3, regarding a 
class of equity or debt securities.
    (2) In order to be eligible to file a Form 15F under this 
paragraph:
    (i) An issuer must currently not be required to register a class of 
securities under section 12(g) of the Act or be required to file 
reports under section 15(d) of the Act; and
    (ii) If a foreign private issuer terminated the registration of a 
class of securities pursuant to Sec.  240.12g-4 or suspended its 
reporting obligations pursuant to Sec.  240.12h-3 or section 15(d) of 
the Act regarding a class of equity securities, for at least the 12 
months before the filing of its Form 15F, the issuer must have 
maintained a listing of the subject class of equity securities on an 
exchange in a foreign jurisdiction that, either singly or together with 
one other foreign jurisdiction, constitutes the primary trading market 
for the issuer's class of equity securities.

[[Page 1412]]

    (3)(i) If the Commission does not object, 90 days after the filing 
of a Form 15F under this paragraph, or such shorter period as the 
Commission may determine, the effectiveness of any of the following 
shall occur:
    (A) The termination under this section of the registration of a 
class of equity securities, which was the subject of a Form 15 filed 
pursuant to Sec.  240.12g-4, and the duty to file reports required by 
section 13(a) of the Act regarding that class of securities; or
    (B) The termination of a foreign private issuer's reporting 
obligations under section 15(d) of the Act, which had previously been 
suspended by the terms of that section or by the issuer's filing of a 
Form 15 pursuant to Sec.  240.12h-3, regarding a class of equity or 
debt securities.
    (ii) If the Form 15F is subsequently withdrawn or denied, the 
foreign private issuer shall, within 60 days after the date of the 
withdrawal or denial, file with or submit to the Commission all reports 
that would have been required had the issuer not filed the Form 15F.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    10. 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.
* * * * *
    11. Add Sec.  249.324 to read as follows:

Sec.  249.324  Form 15F, certification by a foreign private issuer 
regarding the termination of registration of a class of securities 
under section 12(g) or the duty to file reports under section 13(a) or 
section 15(d).

    This form shall be filed by a foreign private issuer to disclose 
and certify the information on the basis of which it meets the 
requirements specified in Rule 12h-6 (Sec.  240.12h-6 of this chapter) 
to terminate the registration of a class of securities under section 
12(g) of the Act (15 U.S.C. 78l(g)) or the duty to file reports under 
section 13(a) of the Act (15 U.S.C. 78m(a)) or section 15(d) of the Act 
(15 U.S.C. 78(o)(d)). In each instance, unless the Commission objects, 
termination occurs 90 days, or such shorter time as the Commission may 
direct, after the filing of Form 15F.

    12. Add Form 15F (referenced in Sec.  249.324) to read as follows:
    (Note: The text of Form 15F will not appear in the Code of 
Federal Regulations.)
OMB APPROVAL
    OMB Number: 3235-0621.
    Expires:
    Estimated average burden hours per response: 30.0.

United States Securities and Exchange Commission, Washington, DC 20549

Form 15F--Certification of a Foreign Private Issuer's Termination of 
Registration of a Class of Securities Under Section 12(g) of the 
Securities Exchange Act of 1934 or Its Termination of the Duty to File 
Reports Under Section 13(a) or Section 15(d) of the Securities Exchange 
Act of 1934

     Commission File Number----------
[fxsp0]----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
[fxsp0]----------------------------------------------------------------
(Address, including zip code, and telephone number, including area 
code, of registrant's principal executive offices)
[fxsp0]----------------------------------------------------------------
(Title of each class of securities covered by this Form)

Place an X in the appropriate box(es) to indicate the provision(s) 
relied upon to terminate the duty to file reports under the 
Securities Exchange Act of 1934:

Rule 12h-6(a)            [ballot]    Rule 12h-6(c)            [ballot]
Rule 12h-6(b)            [ballot]    Rule 12h-6(h)            [ballot]

General Instructions

A. Who May Use Form 15F and When

    1. A foreign private issuer may file Form 15F, pursuant to Rule 
12h-6(a) (17 CFR 240.12h-6(a)) under the Securities Exchange Act of 
1934 (``Exchange Act''), when seeking to terminate:
     The registration of a class of securities under section 
12(g) of the Exchange Act and the corresponding duty to file or 
furnish reports required by section 13(a) of the Exchange Act; or
     The obligation under section 15(d) of the Exchange Act 
to file or furnish reports required by section 13(a) of the Act 
regarding a class of equity securities; or
     Both.
    2. A foreign private issuer may file Form 15F, pursuant to Rule 
12h-6(b) (17 CFR 240.12h-6(b)), when seeking to terminate its 
reporting obligations under section 13(a) or section 15(d) of the 
Exchange Act regarding a class of debt securities.
    3. A foreign private issuer may file Form 15F, pursuant to Rule 
12h-6(c) (17 CFR 240.12h-6(c)), when seeking to terminate reporting 
obligations under section 13(a) or section 15(d) of the Exchange Act 
to which it has succeeded pursuant to Rule 12g-3 (17 CFR 240.12g-3) 
or Rule 15d-5 (17 CFR 240.15d-5).
    4. A foreign private issuer may file Form 15F, pursuant to Rule 
12h-6(h) (17 CFR 240.12h-6(h)), if, before the effective date of 
Rule 12h-6, it terminated the registration of a class of securities 
under section 12(g) of the Act, or suspended its reporting 
obligations regarding a class of equity or debt securities under 
section 15(d) of the Act, in order to:
     Terminate under Rule 12h-6 the registration of a class 
of equity securities that was the subject of a Form 15 (Sec.  
249.323 of this chapter) filed by the issuer pursuant to Sec.  
240.12g-4; or
     Terminate its reporting obligations under section 15(d) 
of the Act, which had been suspended by the terms of that section or 
by the issuer's filing of a Form 15 pursuant to Sec.  240.12h-3, 
regarding a class of equity or debt securities.

 B. Certification Effected by Filing Form 15F

    By completing and signing this Form, the issuer certifies that:
     It meets all of the conditions for termination of 
Exchange Act reporting specified in Rule 12h-6 (17 CFR 240.12h-6); 
and
     There are no classes of securities other than those 
that are the subject of this Form 15F regarding which the issuer has 
Exchange Act reporting obligations.

C. Effective Date

    For an issuer filing Form 15F under Rule 12h-6(a), (b) or (c), 
the duty to file any reports required under section 13(a) of the 
Exchange Act will be suspended immediately upon filing the Form 15F. 
If there are no objections from the Commission, 90 days, or within a 
shorter period as the Commission may determine, after the issuer has 
filed its Form 15F, there shall take effect:
     The termination of registration of a class of 
securities under section 12(g) of the Act;
     The termination of the issuer's duty to file or submit 
reports under section 13(a) or section 15(d) of the Act; or
     Both.
    For an issuer that has already terminated its registration of a 
class of equity securities pursuant to Rule 12g-4 or suspended its 
reporting obligations under section 15(d) or Rule 12h-3, the 
effectiveness of its termination of section 12(g) registration under 
Rule 12h-6 and the corresponding duty to file reports required by 
section 13(a) of the Act, or the termination of its previously 
suspended reporting obligations under section 15(d) of the Act, 
shall also occur 90 days after the issuer has filed its Form 15F 
under Rule 12h-6(h), or within a shorter period as the Commission 
may determine, if there are no objections from the Commission.
    Regardless of the particular Rule 12h-6 provision under which it 
is filing the Form 15F, an issuer that seeks an effective date 
sooner than 90 days after the filing of its Form 15F must submit its 
request to the Commission in writing.

D. Other Filing Requirements

    You must file Form 15F and related materials, including 
correspondence, in electronic format via our Electronic Data 
Gathering, Analysis, and Retrieval (EDGAR) system in accordance with 
the EDGAR rules set forth in Regulation S-T (17 CFR Part 232). The 
Form 15F and related materials must be in the English language as 
required by Regulation S-T Rule 306 (17 CFR 232.306). You must 
provide the signature required for Form 15F in accordance with 
Regulation S-T Rule 302 (17 CFR 232.302). If you have technical 
questions about EDGAR, call the EDGAR Filer Support Office at (202) 
551-8900. If you have questions about the EDGAR

[[Page 1413]]

rules, call the Office of EDGAR and Information Analysis at (202) 
551-3610.
    If the Form 15F is subsequently withdrawn or denied, you must, 
within 60 days after the date of the withdrawal or denial, file with 
or submit to the Commission all reports that would have been 
required had you not filed the Form 15F. See Rule 12h-6(f)(2) (17 
CFR 240.12h-6(f)(2)) and Rule 12h-6(h)(3)(ii) (17 CFR 240.12h-
6(h)(3)(ii)).

E. Rule 12g3-2(b) Exemption

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

Part I

    The purpose of this part is to assist the Commission in 
assessing whether you meet the requirements for terminating your 
Exchange Act reporting under Rule 12h-6. If, pursuant to Rule 12h-6, 
there is an item that does not apply to you, mark that item as 
inapplicable.

Item 1. Exchange Act Reporting History

    A. State when you first incurred the duty to file reports under 
section 13(a) or section 15(d) of the Exchange Act.
    B. State whether you have filed or submitted all reports 
required under Exchange Act section 13(a) or section 15(d) and 
corresponding Commission rules for the 12 months preceding the 
filing of this form, and whether you have filed at least one annual 
report under section 13(a).

Instruction to Item 1

    If you are a successor issuer that has filed this Form 15F 
pursuant to Rule 12h-6(c), and are relying on the reporting history 
of the issuer to which you have succeeded under Rule 12g-3 (17 CFR 
12g-3) or Rule 15d-5 (17 CFR 240.15d-5), identify that issuer and 
provide the information required by this section for that issuer.

 Item 2. Recent United States Market Activity

    State when your securities were last sold in the United States 
in a registered offering under the Securities Act of 1933 (15 U.S.C. 
77a et seq.) (``Securities Act'').

Instructions to Item 2

    1. Do not include registered offerings involving the issuance of 
securities:
    a. To your employees, as that term is defined in Form S-8 (17 
CFR 239.16b);
    b. By selling security holders in non-underwritten offerings;
    c. Upon the exercise of outstanding rights granted by the issuer 
if the rights are granted pro rata to all existing security holders 
of the class of the issuer's securities to which the rights attach;
    d. Pursuant to a dividend or interest reinvestment plan; or
    e. Upon the conversion of outstanding convertible securities or 
upon the exercise of outstanding transferable warrants issued by the 
issuer.

However, you must include registered offerings described in 
paragraphs (c) through (e) of this instruction if undertaken 
pursuant to a standby underwritten offering or other similar 
arrangement in the United States.
    2. If you have registered equity securities on a shelf or other 
Securities Act registration statement under which securities remain 
unsold, disclose the last sale of securities under that registration 
statement. If no sale has occurred during the preceding 12 months, 
disclose whether you have filed a post-effective amendment to 
terminate the registration of unsold securities under that 
registration statement.

Item 3. Primary Trading Market

    A. Identify the exchange outside the United States, and the 
foreign jurisdiction in which that exchange is located, on which you 
have maintained a listing of the class of securities that is the 
subject of this Form.
    B. Provide the date of initial listing on that foreign exchange. 
In addition, disclose whether you have maintained a listing of the 
subject class of securities on that foreign exchange for at least 
the 12 months preceding the filing of this Form.
    C. Disclose the percentage of trading in the subject class of 
securities that occurred in the jurisdiction of your foreign listing 
as of a recent 12-month period.

Instruction to Item 3

    When responding to this item, refer to the definition of 
``primary trading market'' in Rule 12h-6(e) (17 CFR 240.12h-6(e)). 
In accordance with that definition, if your primary trading market 
consists of two foreign jurisdictions, provide the information 
required by this section for each foreign jurisdiction. In addition, 
disclose whether the trading market for your securities in at least 
one of those two foreign jurisdictions is larger than the trading 
market for your securities in the United States as of the same 
recent 12-month period. Disclose the first and last days of that 
recent 12-month period.

Item 4. Comparative Trading Volume Data

    If relying on Rule 12h-6(a)(4)(i) (17 CFR 240.12h-6(a)(4)(i)), 
provide the following information:
    A. Identify the first and last days of the recent 12-month 
period used to meet the requirements of that rule provision.
    B. For the same recent 12-month period, disclose the average 
daily trading volume of the class of securities that is the subject 
of this Form both in the United States and in your primary trading 
market.
    C. For the recent 12-month period, disclose the average daily 
trading volume of the subject class of securities in the United 
States as a percentage of the average daily trading volume for that 
class of securities in your primary trading market.
    D. Disclose whether you have delisted the subject class of 
securities from a national securities exchange or inter-dealer 
quotation system in the United States. If so, provide the date of 
delisting, and, as of that date, disclose the average daily trading 
volume of the subject class of securities in the United States as a 
percentage of the average daily trading volume for that class of 
securities in your primary trading market for the preceding 12-month 
period.
    E. Disclose whether you have terminated a sponsored American 
depositary receipt (ADR) facility regarding the class of subject 
securities. If so, provide the date of the ADR facility termination.

Instructions to Item 4

    1. ``Recent 12-month period'' means a 12-calendar-month period 
that ended no more than 60 days before the filing date of this form, 
as defined under Rule 12h-6(e). You may disclose the comparative 
trading volume data in response to this item in tabular format and 
attached as an exhibit to this Form.
    2. An issuer is ineligible to rely on paragraph (a)(4)(i) of 
Rule 12h-6 if, as of the date of delisting, the average daily 
trading volume of the subject class of securities in the United 
States exceeded 5 percent of the average daily trading volume of 
that class of securities in the issuer's primary trading market, as 
measured over the preceding 12 months, and 12 months has not elapsed 
from the date of delisting.
    3. An issuer is ineligible to rely on paragraph (a)(4)(i) of 
Rule 12h-6 if it has terminated a sponsored ADR facility and 12 
months has not elapsed from the date of termination.

Item 5. Alternative Record Holder Information

    If relying on Rule 12h-6(a)(4)(ii) (17 CFR 240.12h-6(a)(4)(ii)):
    Disclose the number of record holders of the subject class of 
equity securities on a worldwide basis or who are United States 
residents at a date within 120 days before filing this Form. 
Disclose the date used for the purpose of Item 5.

Item 6. Debt Securities

    If relying on Rule 12h-6(b) (17 CFR 240.12h-6(b)):
    Disclose the number of record holders of your debt securities 
either on a worldwide basis or who are United States residents at a 
date within 120 days before the date of filing of this Form. 
Disclose the date used for the purpose of Item 6.

Instructions to Items 5 and 6

    1. When determining the number of record holders of your equity 
or debt securities who are United States residents, refer to Rule 
12h-6(d) (17 CFR 240.12h-6(d)) for the appropriate counting method.
    2. If you have relied upon the assistance of an independent 
information services provider to determine the number of your United 
States equity or debt securities holders, identify this party in 
your response.

 Item 7. Notice Requirement

    If filing Form 15F pursuant to Rule 12h-6(a), (b) or (c):
    A. Disclose the date of publication of the notice, required by 
Rule 12h-6(g) (17 CFR 240.12h-6(g)), disclosing your intent to 
terminate your duty to file reports under

[[Page 1414]]

section 13(a) or 15(d) of the Exchange Act or both.
    B. Identify the means, such as publication in a particular 
newspaper, used to disseminate the notice in the United States.

Instruction to Item 7

    If you have submitted a copy of the notice under cover of a Form 
6-K (17 CFR 249.306), disclose the submission date of the Form 6-K. 
If not, attach a copy of the notice as an exhibit to this Form. See 
Rule 12h-6(g).

Item 8. Prior Form 15 Filers

    If relying on Rule 12h-6(h):
    A. Disclose whether, before the effective date of Rule 12h-6, 
you filed a Form 15 (17 CFR 249.323) to terminate the registration 
of a class of equity securities pursuant to Rule 12g-4 (17 CFR 
240.12g-4) or to suspend your reporting obligations under section 
15(d) of the Act regarding a class of equity or debt securities 
pursuant to Rule 12h-3 (17 CFR 240.12h-3). If so, disclose the date 
that you filed the Form 15. If you suspended your reporting 
obligations by the terms of section 15(d), disclose the effective 
date of that suspension as well as the date that you filed a Form 15 
to notify the Commission of that suspension pursuant to Rule 15d-6 
(17 CFR 240.15d-6).
    B. Disclose whether, since the effectiveness of your termination 
of registration pursuant to Rule 12g-4, or of your suspension of 
reporting pursuant to Rule 12h-3 or section 15(d) of the Exchange 
Act, your reporting obligations under section 13(a) or section 15(d) 
of the Exchange Act have remained terminated or suspended.
    C. If you terminated the registration of a class of equity 
securities pursuant to Rule 12g-4 or suspended your reporting 
obligations regarding a class of equity securities pursuant to Rule 
12h-3 or section 15(d) of the Exchange Act, provide the disclosure 
required by Item 3 of this Form, ``Primary Trading Market.''

Part II

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

    Disclose the address of your Internet Web site or of the 
electronic information delivery system in your primary trading 
market on which you will publish the information required under Rule 
12g3-2(b)(1)(iii) (17 CFR 240.12g3-2(b)(1)(iii)).

Instruction to Item 9

    Refer to Note 1 to Rule 12g3-2(e) for instructions regarding 
providing English translations of documents published pursuant to 
Rule 12g3-2(b)(1)(iii) (17 CFR 240.12g3-2(b)(1)(iii).

Part III

Item 10. Exhibits

    List the exhibits attached to this Form.

Instruction to Item 10

    In addition to exhibits specifically mentioned on this Form, you 
may attach as an exhibit any document providing information that is 
material to your eligibility to terminate your reporting obligations 
under Exchange Act Rule 12h-6. You should refer to any relevant 
exhibit when responding to the items on this Form.

Item 11. Undertakings

    Furnish the following undertaking:
    The undersigned issuer hereby undertakes to withdraw this Form 
15F if, at any time before the effectiveness of its termination of 
reporting under Rule 12h-6, it has actual knowledge of information 
that causes it reasonably to believe that, at the time of filing the 
Form 15F:
    (1) The average daily trading volume of its subject class of 
securities in the United States during a recent 12-month period 
exceeded 5 percent of the average daily trading volume of that class 
of securities in the issuer's primary trading market during the same 
period, if proceeding under Rule 12h-6(a)(4)(i);
    (2) Its subject class of securities was held of record by 300 or 
more United States residents or 300 or more persons worldwide, if 
proceeding under Rule 12h-6(a)(4)(ii) or Rule 12h-6(b); or
    (3) It otherwise no longer qualified for termination of its 
Exchange Act reporting obligations under Rule 12h-6.

Instruction to Item 11

    After filing this Form, an issuer has no continuing obligation 
to make inquiries or perform other work concerning the information 
contained in this Form, including its assessment of trading volume 
or ownership of its securities in the United States.

Signature

    Pursuant to the requirements of the Securities Exchange Act of 
1934, [name of registrant as specified in charter] has duly 
authorized the undersigned person to sign on its behalf this 
certification on Form 15F. In so doing, [name of registrant as 
specified in charter] certifies that, as represented on this Form, 
it has complied with all of the conditions set forth in Rule 12h-6 
for terminating its registration under section 12(g) of the Exchange 
Act, or its duty to file reports under section 13(a) or section 
15(d) of the Exchange Act, or both.
By:--------------------------------------------------------------------

Title:-----------------------------------------------------------------

Date:------------------------------------------------------------------

    By the Commission.

    Dated: December 22, 2006.
Florence E. Harmon,
Deputy Secretary.

[FR Doc. E6-22405 Filed 1-10-07; 8:45 am]

BILLING CODE 8011-01-P