SEC Votes To Propose All-Electronic Disclosure For Foreign Issuers

by Mike Godfrey, Tax-News.com, Washington

15 February 2008

It was announced on Wednesday that the US Securities and Exchange Commission had unanimously voted to propose amendments to modernize its disclosure requirements for foreign companies, including eliminating all requirements for paper submissions.

Many of the proposed SEC rule changes are designed to update the Commission’s rules, reflect advancements in technology, and respond to the increasing globalization of the capital markets

“The proposed amendments would bring our foreign company disclosure requirements into the 21st Century by eliminating any requirement for paper, and by giving investors instant access to foreign company disclosure documents electronically, in English, on the Internet,” explained SEC Chairman Christopher Cox.

John White, Director of the Commission’s Division of Corporation Finance, added: “Some of today’s rule proposals should be viewed as the latest in a series of recent Commission initiatives to modernize our Exchange Act rules in the wake of the ongoing globalization of securities markets. Others are the result of the Commission’s continuous assessment of its disclosure and other requirements for all registered companies, including registered foreign private issuers, to determine whether they should be revised in light of market developments, new technologies, or other matters."

"All of the proposals would serve the best interests of investors without, we believe, unduly burdening foreign private issuers.”

Conrad Hewitt, the Commission’s Chief Accountant, explained that: “As demonstrated by these proposals and other recent action taken by the Commission, the Commission continues to balance the information needs of investors with providing the opportunity for U.S. investors to invest in foreign securities in our markets. I look forward to receiving public input during the comment period.”

One set of proposals, known as the Foreign Issuer Reporting Enhancements, would update Exchange Act filing requirements, and enhance disclosure required by foreign private issuers in response to changes in foreign filing requirements, market practices, and other areas of the Commission’s regulation.

Another proposal would amend Exchange Act Rule 12g3-2(b), which exempts a foreign private issuer from having to register a class of equity securities under Section 12(g) of the Exchange Act, based on the submission to the Commission of certain information published outside the United States, in order to reflect advances in technology and other recent global changes.

Comments on these proposals should be received by the Commission no later than 60 days after their publication in the Federal Register.

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