SEC Slammed Over Delisting Requirements For Foreign Firms

by Glen Shapiro, LawAndTax-News.com, New York

13 February 2004

European business leaders have this week called upon the US Securities and Exchange Commission (SEC) to amend the reporting rules for foreign firms which seek to delist shares in the United States.

In a letter sent to SEC chairman, William Donaldson on Wednesday, European Association for Listed Companies members argued that the existing requirements present European firms with "substantial costs of complying with US reporting rules forever, even if they never realise the benefits sought from the US listing".

The letter went on to call the rules "a big disincentive for companies that might otherwise be tempted to enter the US market".

Currently, a non-US firm must demonstrate that it has fewer than 300 US shareholders in order to deregister and escape from the stringent reporting requirements imposed on US-listed firms. However, these requirements are reinstated if it is found to have more than 300 American shareholders at the end of a subsequent year.

In contrast, the EALC revealed, US companies may withdraw their listings in Europe by providing notice and complying with technical requirements.

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