SEC To Re-Examine Rules Governing De-registration Of Foreign Private Issuers
The US Securities and Exchange Commission last week announced that at its open
meeting this Wednesday, it will consider a staff recommendation to repropose new
rules governing when a foreign private issuer may deregister its securities under
the Securities Exchange Act of 1934, and cease making filings with the Commission.
The staff intends to recommend deregistration thresholds based solely on trading
volume. The original proposal had used thresholds based primarily on the percentage
of US holders, as well as trading volume. "We believe that the new proposal will better serve the needs of both
US investors and foreign issuers by providing a clear, consistent, easy-to-apply,
and fair standard pursuant to which foreign registrants may withdraw from our
capital markets and end their obligations to comply with our rules," explained
John White, Director of the Commission's Division of Corporation Finance. He continued: "The Commission remains committed to investor protection as well as sensitive
to the opportunities and challenges of increasing globalization and cross-border
regulatory cooperation. This proposal should continue to provide appropriate
protections for US investors while promoting capital formation in the US
and making our markets more attractive to foreign companies." Reproposal is necessary because basing the threshold solely on trading volume
was not addressed fully in the Commission's original December 2005 proposal
and request for comment. The reproposal also will reflect modifications, in
response to comments, of other conditions to deregistration outlined in the
original proposal. Staff will recommend a 30-day comment period for the reproposed rules, and
expect to recommend final rules in the first quarter of 2007. .
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