[Federal Register: February 25, 2008 (Volume 73, Number 37)]
[Proposed Rules]
[Page 10101-10122]
[DOCID:fr25fe08-19]

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

Part II

Securities and Exchange Commission

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

17 CFR Parts 239, 240 and 249

Exemption From Registration Under Section 12(g) of the Securities
Exchange Act of 1934 for Foreign Private Issuers; Proposed Rule

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

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 239, 240 and 249

[Release No. 34-57350; International Series Release No. 1307; File No.
S7-04-08]
RIN 3235-AK04

Exemption From Registration Under Section 12(G) of the Securities
Exchange Act of 1934 for Foreign Private Issuers

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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

SUMMARY: We are proposing amendments to the rule that exempts a foreign
private issuer from having to register a class of equity securities
under Section 12(g) of the Securities Exchange Act of 1934 (``Exchange
Act'') based on the submission to the Commission of certain information
published outside the United States. The exemption allows a foreign
private issuer to exceed the registration thresholds of Section 12(g)
and effectively have its equity securities traded on a limited basis in
the over-the-counter market in the United States. Currently, in order
to obtain the exemption under Exchange Act Rule 12g3-2(b), a non-
reporting foreign private issuer must submit to the Commission written
materials in paper, including a list of information that the issuer
must disclose publicly pursuant to its home jurisdiction laws or stock
exchange requirements, or that is sent to its security holders, along
with paper copies of documents containing the required information that
the issuer has published for its last fiscal year. A successful
applicant may maintain the exemption by submitting to the Commission
paper copies of these documents on an ongoing basis. The proposed
amendments would eliminate paper submission requirements by
automatically granting the Rule 12g3-2(b) exemption to a foreign
private issuer that meets specified conditions, which do not depend on
a count of an issuer's United States security holders, and which would
require an issuer to publish electronically in English specified non-
United States disclosure documents. As a result, the proposed
amendments should make it easier for U.S. investors to gain access to a
foreign private issuer's material non-United States disclosure
documents and make better informed decisions regarding whether to
invest in that issuer's equity securities through the over-the-counter
market in the United States or otherwise.

DATES: Comments must be received on or before April 25, 2008.

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<EMAIL_ADDRESS>Please include
File Number S7-04-08 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 20549-1090.

All submissions should refer to File Number S7-04-08. 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, on official business days between the hours of 10 a.m. and 3
p.m. 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 propose to amend Commission Rules 12g3-2
\1\ and 15c2-11 \2\ under the Exchange Act,\3\ Forms 15,\4\ 15F,\5\ 40-
F,\6\ and 6-K \7\ under the Exchange Act, and Form F-6 \8\ under the
Securities Act of 1933 (``Securities Act'').\9\
---------------------------------------------------------------------------

    \1\ 17 CFR 240.12g3-2.
    \2\ 17 CFR 240.15c2-11.
    \3\ 15 U.S.C. 78a, et seq.
    \4\ 17 CFR 249.323.
    \5\ 17 CFR 249.324.
    \6\ 17 CFR 249.240f.
    \7\ 17 CFR 249.306.
    \8\ 17 CFR 239.36.
    \9\ 15 U.S.C. 77a, et seq.
---------------------------------------------------------------------------

Table of Contents

I. Executive Summary and Background
    A. Introduction
    B. Current Rule 12g3-2(b) Requirements
    C. Proposed Rule 12g3-2 Amendments
II. Discussion
    A. Proposed Non-Reporting Condition
    1. Non-Reporting Issuers
    2. Deregistered Issuers
    B. Proposed Foreign Listing Condition
    C. Proposed Quantitative Standard
    1. Trading Volume Benchmark
    2. Rule 12h-6 Issuers
    D. Proposed Electronic Publishing of Non-U.S. Disclosure
Documents
    1. Electronic Publishing Requirement to Claim Exemption
    2. Electronic Publishing Requirement to Maintain Exemption
    E. Proposed Elimination of the Written Application Requirement
    F. Proposed Duration of the Amended Rule 12g3-2(b) Exemption
    G. Proposed Elimination of the Successor Issuer Prohibition
    H. Proposed Elimination of the Rule 12g3-2(b) Exception for MJDS
Filers
    I. Proposed Elimination of the ``Automated Inter-Dealer
Quotation System'' Prohibition and Related Grandfathering Provision
    J. Proposed Revisions to Form F-6
    K. Proposed Amendment of Exchange Act Rule 15c2-11
    L. Proposed Transition Periods
    1. Regarding Section 12 Registration
    2. Regarding Processing of Paper Submissions
    M. Revisions to Form 15
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 Amendments

I. Executive Summary and Background

A. Introduction

    Congress adopted Section 12(g) of the Exchange Act \10\ in order to
provide investors trading in over-the-counter securities, in which
there was significant public interest, with the same fundamental
disclosure protections afforded to investors trading in securities
listed on a national securities exchange.\11\ When read in conjunction
with the subsequently adopted Exchange Act Rule 12g-1,\12\

Section 12(g) requires an issuer \13\ to file an Exchange Act
registration statement regarding a class of equity securities within
120 days of the last day of its fiscal year if, on that date, the
number of its record holders is 500 or greater, and the issuer's total
assets exceed $10 million.\14\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78l(g).
    \11\ Congress adopted Exchange Act Section 12(g) as part of the
Securities Act Amendments of 1964 [Pub. L. 88-467 (August 20,
1964)]. See the 88th Congress, 2d Session, U.S. House of
Representatives Report No. 1418 (May 19, 1964).
    \12\ 17 CFR 240.12g-1.
    \13\ Application of Section 12(g) requires that the issuer have
the necessary jurisdictional nexus with interstate commerce in the
United States. 15 U.S.C. 78l(g)(1).
    \14\ Through successive amendments of Rule 12g-1, the Commission
raised the statutory asset threshold from an amount exceeding
$1,000,000 to an amount exceeding $10,000,000.
---------------------------------------------------------------------------

    When adopting Section 12(g), Congress expressly granted the
Commission the power to exempt any security of a foreign issuer from
that section if it found that ``such exemption is in the public
interest and is consistent with the protection of investors.'' \15\ The
Commission initially adopted a provisional exemption from Section 12(g)
for the securities issued by any foreign government, foreign national
or foreign corporation so that it could study more fully the extent to
which Section 12(g) should apply to foreign securities.\16\ This
initiative involved a review of the disclosure requirements and
practices of many of the foreign countries with issuers whose
securities were traded in the United States over-the-counter
market.\17\
---------------------------------------------------------------------------

    \15\ Exchange Act Section 12(g)(3) [15 U.S.C. 78l(g)(3)]. In an
earlier draft of the 1964 amendments, the U.S. Senate justified an
exemptive provision for the securities of foreign issuers based on
the serious difficulties that would result from the enforcement of
Exchange Act Section 12(g)'s registration and reporting requirements
``against foreign issuers outside the jurisdiction of the United
States who do not voluntarily seek funds in the American capital
markets or listing on an exchange. * * *'' 88th Congress, 1st
Session, U.S. Senate Report No. 379 1, 29 (July 24, 1963).
    \16\ Release No. 34-7427 (September 15, 1964). At that time,
while expressing its belief that, to the extent practicable, U.S.
investors in foreign securities should be afforded the same investor
protections to which U.S. investors in domestic securities are
entitled, the Commission also recognized the practical problems ``of
enforcement and compliance and of differing foreign laws'' raised by
the application of Section 12(g) to foreign companies.
    \17\ See Release No. 34-7746 (November 16, 1965).
---------------------------------------------------------------------------

    Following completion of its work, in 1967 the Commission adopted
Exchange Act Rule 12g3-2,\18\ which established two exemptions from
Section 12(g) for foreign private issuers.\19\ Exchange Act Rule 12g3-
2(a) exempts a foreign private issuer whose equity securities are held
of record by less than 300 residents in the United States, although it
has 500 or more record holders on a worldwide basis as of the end of
its most recently completed fiscal year.\20\ An issuer that relies on
this exemption must reassess the number of its U.S. shareholders at the
end of each fiscal year in order to determine whether the exemption
remains valid.
---------------------------------------------------------------------------

    \18\ Release No. 34-8066 (April 28, 1967).
    \19\ 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.
    \20\ 17 CFR 240.12g3-2(a).
---------------------------------------------------------------------------

    Although, for this first exemption, the Commission used a
traditional shareholder test to determine whether there was sufficient
U.S. investor interest to warrant requiring Section 12(g)
registration,\21\ it adopted a different approach for the second
exemption. Exchange Act Rule 12g3-2(b)\22\ exempts a foreign private
issuer from Section 12(g) registration if, among other requirements,
the issuer furnishes to the Commission on an ongoing basis information
it has made public or is required to make public under the laws of its
jurisdiction of incorporation, organization or domicile, pursuant to
its non-U.S. stock exchange filing requirements, or that it has
distributed or is required to distribute to its security holders
(collectively, its ``non-U.S. disclosure documents'').\23\ The
Commission adopted this exemption because there was improvement in the
reporting of financial information by foreign issuers, due to changes
in foreign corporate laws, stock exchange requirements, and voluntary
disclosure by the foreign companies themselves.\24\ Because of the
continued and expected improvement in the quality of information being
made public by foreign issuers, the Commission determined that Section
12(g) exemptive relief was appropriate for a foreign private issuer
that has not sought a public market in the United States for its equity
securities, and that furnishes to the Commission its non-U.S.
disclosure documents.\25\ These documents would then be available for
review by U.S. investors through the Commission's public reference
facilities.
---------------------------------------------------------------------------

    \21\ The Commission reasoned that having fewer than 300 U.S.
shareholders evidenced such an insufficient public interest that it
could not justify applying Section 12(g) although a foreign private
issuer may have breached the statutory threshold. The Commission
further relied on Exchange Act Section 12(g)(4) [15 U.S.C.
78l(g)(4)], which provides that an issuer may file a certification
with the Commission to terminate its registration when its record
holders have fallen below 300. Release No. 34-7746.
    \22\ 17 CFR 240.12g3-2(b).
    \23\ Exchange Act Rule 12g3-2(b)(1)(iii) (17 CFR 240.12g3-
2(b)(iii)).
    \24\ Release No. 34-8066.
    \25\ Id.
---------------------------------------------------------------------------

B. Current Rule 12g3-2(b) Requirements

    As a condition to obtaining the Exchange Act Rule 12g3-2(b)
exemption, an issuer must initially submit to the Commission a list of
its non-U.S. disclosure requirements as well as copies of its non-U.S.
disclosure documents published since the beginning of its last fiscal
year.\26\ The Rule clarifies that an issuer need only submit copies of
information that is material to an investment decision for the purpose
of obtaining or maintaining the exemption.\27\ As examples of material
information, the Rule lists an issuer's financial condition or results
of operations, changes in its business, the acquisition or disposition
of assets, the issuance, redemption or acquisition of securities,
changes in management or control, the granting of options or other
payment to directors or officers, and transactions with directors,
officers or principal security holders. At the time of the initial
submission, an issuer must also provide the Commission with the number
of U.S. holders of its equity securities and the percentage held by
them, as well as a brief description of how its U.S. holders acquired
those shares.\28\
---------------------------------------------------------------------------

    \26\ Exchange Act Rule 12g3-2(b)(1)(i) (17 CFR 240.12g3-
2(b)(1)(i)). Historically, an issuer has submitted its home
jurisdiction materials as part of a letter application to the
Commission, which has been processed through the Office of
International Corporate Finance in the Division of Corporation
Finance.
    \27\ Exchange Act Rule 12g3-2(b)(3) (17 CFR 240.12g3-2(b)(3)).
    \28\ Exchange Act Rule 12g3-2(b)(1)(v) (17 CFR 240.12g3-
2(b)(1)(v)). An issuer must also disclose the dates and
circumstances of the most recent public distribution of securities
by the issuer or an affiliate.
---------------------------------------------------------------------------

    Rule 12g3-2(b) currently requires that an applicant submit all of
the necessary non-U.S. disclosure documents and other information
before the date that a registration statement would otherwise become
due under Section 12(g).\29\ Once an issuer has timely submitted its
application and obtained the exemption, the issuer may surpass the
record holder thresholds as long as it maintains the exemption by
submitting the required non-U.S. documents.
---------------------------------------------------------------------------

    \29\ Exchange Act Rule 12g3-2(b)(2) (17 CFR 240.12g3-2(b)(2)).
---------------------------------------------------------------------------

    From its inception, the Rule 12g3-2(b) disclosure regime has
mandated paper submissions. Even after the adoption of EDGAR filing
rules for foreign private issuers, the Commission has required a
foreign private issuer to submit its

initial Rule 12g3-2(b) supporting materials in paper.\30\ The
Commission has based this treatment of Rule 12g3-2(b) materials on the
analogous treatment of applications for an exemption from Exchange Act
reporting obligations filed pursuant to Exchange Act Section 12(h).\31\
---------------------------------------------------------------------------

    \30\ See Release No. 33-8099 (May 14, 2002), 67 FR 36678 (May
24, 2002).
    \31\ 15 U.S.C. 78l(h). We require the filing of Section 12(h)
exemptive applications in paper pursuant to Regulation S-T Rule
101(c)(16) (17 CFR 232.101(c)(16)).
---------------------------------------------------------------------------

    Once a foreign private issuer has obtained the Rule 12g3-2(b)
exemption, it may have its equity securities traded on a limited basis
in the over-the-counter market in the United States. Typically a
foreign private issuer obtains the Rule 12g3-2(b) exemption in order to
have established an unlisted, sponsored or unsponsored depositary
facility for its American Depositary Receipts (``ADRs'').\32\
Establishing the Rule 12g3-2(b) exemption also facilitates resales of
an issuer's securities to qualified institutional buyers (``QIBs'')
under Rule 144A.\33\ It further permits registered broker-dealers to
fulfill their current information delivery obligations concerning
foreign private issuers' securities for which they seek to publish
quotations.\34\
---------------------------------------------------------------------------

    \32\ 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.
The filing of Securities Act Form F-6 (17 CFR 239.36) is required in
order to establish an ADR facility. The eligibility criteria for the
use of Form F-6 include the requirement that the issuer of the
deposited securities have a reporting obligation under Exchange Act
section 13(a) or have established the exemption under Rule 12g3-
2(b). See General Instruction I.A.3 of Form F-6. While required to
be registered on Form F-6 under the Securities Act, ADRs are exempt
from registration under Exchange Act Section 12(g) pursuant to
Exchange Act Rule 12g3-2(c) (17 CFR 240.12g3-2(c)).
    \33\ See Securities Act Rule 144A(d)(4) (17 CFR 230.144A(d)(4)).
    \34\ Brokers currently can comply with their 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
by, in part, reviewing the information furnished to the Commission
under the exemption. See Rule 15c2-11(a)(4) (17 CFR 240.15c2-
11(a)(4)).
---------------------------------------------------------------------------

    The Rule 12g3-2(b) exemption has generally not been available to a
foreign private issuer that had a class of securities registered under
Exchange Act Section 12 or had a Section 15(d) reporting obligation,
active or suspended, during the previous 18 months.\35\ The exemption
has similarly been unavailable to an issuer that succeeded to the
Exchange Act reporting obligations of another company following a
merger, consolidation, acquisition or exchange of shares.\36\
---------------------------------------------------------------------------

    \35\ Exchange Act Rule 12g3-2(d)(1) (17 CFR 240.12g3-2(d)(1)).
The 18-month prohibition does not apply to a Canadian issuer that
incurred Section 15(d) reporting obligations solely from the filing
of a registration statement under the Commission's
Multijurisdictional Disclosure System (``MJDS'').
    \36\ Exchange Act Rule 12g3-2(d)(2) (17 CFR 240.12g3-2(d)(2)).
Similarly, MJDS filers are not subject to this restriction.
---------------------------------------------------------------------------

    However, in March 2007, the Commission adopted amendments to Rule
12g3-2, which enable a foreign private issuer to claim the Rule 12g3-
2(b) exemption immediately upon the effectiveness of its termination of
Exchange Act registration and reporting pursuant to newly adopted
Exchange Act Rule 12h-6.\37\ While these amendments eliminated the 18-
month and successor issuer prohibitions for issuers terminating their
Exchange Act registration and reporting under Rule 12h-6, the
prohibitions still apply to foreign private issuers that have exited
the Exchange Act reporting regime under Exchange Act Rule 12g-4 or 12h-
3.\38\
---------------------------------------------------------------------------

    \37\ 17 CFR 240.12h-6. The Commission adopted these Rule 12g3-2
amendments and Rule 12h-6 in Release No. 34-55540 (March 27, 2007),
72 FR 16934 (April 5, 2007).
    \38\ 17 CFR 240.12g-4 and 240.12h-3. Both Rules 12g-4 and 12h-3
permit an issuer to exit the Exchange Act reporting regime following
the filing of a Form 15 (17 CFR 249.323), which certifies that it
has fewer than 300 record holders or less than 500 record holders
and total assets not exceeding $10 million on the last day of each
of its most recent 3 fiscal years.
---------------------------------------------------------------------------

    In order to maintain the Rule 12g3-2(b) exemption, an issuer must
furnish to the Commission on an ongoing basis its non-U.S. disclosure
documents. Until the March 2007 amendments, the Commission required an
issuer to submit those documents in paper to the Commission. The March
amendments require an issuer that has obtained the Rule 12g3-2(b)
exemption, upon the effectiveness of its termination of registration
and reporting pursuant to newly adopted Rule 12h-6, to publish its non-
U.S. disclosure documents on an ongoing basis on its Internet Web site
or through an electronic information delivery system generally
available to the public in its primary trading market, rather than
submit that information in paper to the Commission.\39\ The amendments
further permit a foreign private issuer that has obtained or will
obtain the Rule 12g3-2(b) exemption, upon application to the Commission
and not pursuant to Rule 12h-6, to publish electronically in the same
manner its non-U.S. documents required to maintain the exemption.\40\
---------------------------------------------------------------------------

    \39\ Exchange Act Rule 12g3-2(e) (17 CFR 240.12g3-2(e)).
    \40\ Exchange Act Rule 12g3-2(f) (17 CFR 240.12g3-2(f)).
---------------------------------------------------------------------------

    The March 2007 amendments further clarified the English translation
requirements under Rule 12g3-2(b).\41\ The amendments provide that,
when electronically publishing its non-U.S. documents required to
maintain the Rule 12g3-2(b) exemption, at a minimum, a foreign private
issuer must electronically publish English translations of the
following documents if in a foreign language:
---------------------------------------------------------------------------

    \41\ Rule 12g3-2(b)(4) (17 CFR 240.12g3-2(b)(4)) provides that
copies furnished to the Commission of press releases and any
materials distributed directly to security holders must be in
English, and states that English summaries and versions may be used
instead of English translations. However, the rule does not specify
what other documents must be translated fully into English, and when
summaries or versions may be used.
---------------------------------------------------------------------------

     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.\42\
---------------------------------------------------------------------------

    \42\ Note 1 to Exchange Act Rule 12g3-2(e).
---------------------------------------------------------------------------

    The March 2007 amendments also provide that, for a foreign private
issuer that electronically publishes its non-U.S. disclosure documents,
the Rule 12g3-2(b) exemption remains in effect for as long as the
issuer fulfills the ongoing non-U.S. disclosure requirement, or until
the issuer registers a class of securities under Section 12 of the
Exchange Act or incurs reporting obligations under Section 15(d) of the
Exchange Act.\43\ This is consistent with the Commission's treatment of
issuers making paper submissions under Rule 12g3-2(b).
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78o(d).
---------------------------------------------------------------------------

C. Proposed Rule 12g3-2 Amendments

    Since the initial adoption of Rule 12g3-2(b) four decades ago, the
globalization of securities markets, advances in information
technology, the increased use of ADR facilities by foreign companies to
trade their securities in the United States, and other factors have
increased significantly the number of foreign companies that have
engaged in cross-border activities, as well as increased the amount of
U.S. investor interest in the securities of foreign companies. These
developments led us recently to re-evaluate and revise the Commission
rules governing when a foreign private issuer may terminate its
Exchange Act registration and reporting obligations.\44\

We believe these same factors warrant reconsidering the Commission
rules that determine when a foreign private issuer must enter the
Section 12(g) regime as well.
---------------------------------------------------------------------------

    \44\ Several commenters on Rule 12h-6 encouraged the Commission
to address the registration requirements under Section 12(g) for
foreign private issuers as well as the rules relating to termination
of Exchange Act registration and reporting.
---------------------------------------------------------------------------

    We propose to amend Exchange Act Rule 12g3-2 to permit a foreign
private issuer to claim the Rule 12g3-2(b) exemption, without having to
submit an application to the Commission, as long as:
     The issuer is not required to file or furnish reports
under Exchange Act Section 13(a) \45\ or 15(d) of the Act;
---------------------------------------------------------------------------

    \45\ 15 U.S.C. 78m(a).
---------------------------------------------------------------------------

     The issuer currently maintains a listing of the subject
class of securities on one or more exchanges 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;
     Either:
    [cir] The average daily trading volume of the subject class of
securities in the United States for the issuer's most recently
completed fiscal year has been no greater than 20 percent of the
average daily trading volume of that class of securities on a worldwide
basis for the same period; or
    [cir] The issuer has terminated its registration of a class of
securities under Section 12(g) of the Act, or terminated its obligation
to file or furnish reports under Section 15(d) of the Act, pursuant to
Exchange Act Rule 12h-6; and
     Unless claiming the exemption in connection with or
following its recent Exchange Act deregistration, the issuer has
published specified non-U.S. disclosure documents, required to be made
public from the first day of its most recently completed fiscal year,
in English on its Internet Web site or through an electronic
information delivery system generally available to the public in its
primary trading market.
    All foreign private issuers that met the above requirements would
be immediately exempt from Exchange Act registration under Rule 12g3-
2(b) without having to apply to, or otherwise notify, the Commission,
concerning the exemption. Thus, a foreign private issuer that exceeds
the 300 U.S. holder threshold could automatically claim the exemption
as long as it is not otherwise subject to Exchange Act reporting, meets
the foreign listing condition, has 20 percent or less of its worldwide
trading market in the United States, and electronically publishes the
specified non-U.S. disclosure documents, as required under the proposed
amendments.\46\
---------------------------------------------------------------------------

    \46\ An issuer that has fewer than 300 U.S. resident
shareholders would continue to be exempt from Exchange Act
registration without any other conditions unless it also sought to
establish the Rule 12g3-2(b) exemption.
---------------------------------------------------------------------------

    An issuer could also immediately claim the Rule 12g3-2(b) exemption
upon the effectiveness of, or following its recent Exchange Act
deregistration, whether pursuant to Rule 12g-4, 12h-3, or 12h-6, or the
suspension of its reporting obligations under Section 15(d),\47\ if it
met the above requirements absent the electronic publication condition
for its most recently completed fiscal year. Since a recently
deregistered company will already have filed its Exchange Act reports
on EDGAR for its most recently completed fiscal year, such a prior year
publication requirement is not necessary to protect investors.
---------------------------------------------------------------------------

    \47\ An issuer may suspend its Section 15(d) reporting
obligations under Rule 12h-3 or Section 15(d) itself. The statutory
section provides that suspension occurs if, on the first day of the
fiscal year, other than the year in which the issuer's registration
statement went effective, the issuer's record holders number less
than 300.
---------------------------------------------------------------------------

    Like the March 2007 amendments, the proposed rules would require
any issuer, whether a prior registrant or not, to maintain the Rule
12g3-2(b) exemption by publishing, on an ongoing basis and for each
subsequent fiscal year, in English, on its Internet Web site or through
an electronic information delivery system generally available to the
public in its primary trading market, the information specified for its
last fiscal year. The proposed rules would require the electronic
publication in English of the same types of information required under
the March 2007 amendments.
    The proposed rules provide that the Rule 12g3-2(b) exemption will
remain in effect for as long as a foreign private issuer satisfies the
electronic publication condition, or until:
     The issuer no longer maintains a listing for the subject
class of securities on one or more exchanges in its primary trading
market;
     The average daily trading volume of the subject class of
securities in the United States exceeds 20 percent of the average daily
trading volume of that class of securities on a worldwide basis for the
issuer's most recently completed fiscal year, other than the year in
which the issuer first claims the exemption; or
     The issuer registers a class of securities under section
12 of the Act or incurs reporting obligations under section 15(d) of
the Act.
    By requiring the electronic publication in English of specified
non-U.S. disclosure documents for an issuer claiming the Rule 12g3-2(b)
exemption, the proposed amendments should make it easier for U.S.
investors to gain access to a foreign private issuer's material non-
U.S. disclosure documents, and make better informed decisions regarding
whether to invest in that issuer's equity securities through the over-
the-counter market in the United States or otherwise. Thus, the
proposed amendments should foster increased efficiency in the trading
of the issuer's securities for U.S. investors.
    By enabling a qualified foreign private issuer to claim the Rule
12g3-2(b) exemption automatically, and without regard to the number of
its U.S. shareholders, the proposed rule amendments should encourage
more foreign private issuers to claim the Rule 12g3-2(b) exemption.
That would enable the establishment of additional ADR facilities, make
it easier for broker-dealers to fulfill their obligations under
Exchange Act Rule 15c2-11 to investors with respect to the equity
securities of a non-reporting foreign company, and facilitate the
resale of a foreign company's securities to QIBs in the United States
under Securities Act Rule 144A. Consequently, the proposed rule
amendments should foster the increased trading of a foreign company's
securities in the U.S. over-the-counter market, which could benefit
investors.

II. Discussion

A. Proposed Non-Reporting Condition

    Proposed Exchange Act Rule 12g3-2(b) would require a foreign
private issuer to have no reporting obligations under Exchange Act
Section 13(a) or 15(d) as a condition to the exemption under the
Rule.\48\ Like the current non-Exchange Act reporting condition of Rule
12g3-2(b),\49\ the purpose of this provision is to prevent an issuer
from claiming the Rule 12g3-2(b) exemption when it already has incurred
active Exchange Act reporting obligations.
---------------------------------------------------------------------------

    \48\ Proposed Exchange Act Rule 12g3-2(b)(1).
    \49\ Rule 12g3-2(d)(1) (17 CFR 240. 12g3-2(d)(1)).
---------------------------------------------------------------------------

1. Non-Reporting Issuers
    A foreign private issuer would satisfy the proposed non-reporting
condition if it did not already have reporting obligations under either
Exchange Act Section 13(a) or 15(d). Since Section 13(a) imposes
reporting obligations on an issuer that has registered a class of
securities under Section 12, a foreign private issuer that has an
effective registration statement filed with the Commission under
Section 12(b), for

example, covering a class of debt securities, or Section 12(g),
covering a particular class of equity securities, would be ineligible
to claim the exemption. This treatment is consistent with the current
Exchange Act reporting prohibition under Rule 12g3-2(b).\50\
---------------------------------------------------------------------------

    \50\ Exchange Act Rule 12g3-2(d)(1).
---------------------------------------------------------------------------

    Currently an issuer may apply for the Rule 12g3-2(b) exemption,
although it may have exceeded the Section 12(g) shareholder thresholds
on the last day of its most recently completed fiscal year, as long as
the statutory 120-day period for filing a Section 12(g) registration
statement has not lapsed.\51\ We propose to eliminate this 120-day
submission requirement because, under the proposed revised Rule 12g3-
2(b) exemptive scheme, we do not believe that this requirement is
necessary to protect investors.
---------------------------------------------------------------------------

    \51\ Exchange Act Rule 12g3-2(b)(2).
---------------------------------------------------------------------------

    The proposed revised exemptive scheme does not depend on an
issuer's determination of the number of its worldwide or U.S.
shareholders, and does not require that it submit a written application
disclosing that information. Instead, it requires a foreign private
issuer to satisfy a U.S. trading volume standard measured for its most
recently completed fiscal year, meet a foreign listing requirement, and
electronically publish specified material non-U.S. disclosure documents
in English. If we also required an issuer to claim the exemption within
the 120-day period, we believe some issuers, particularly smaller ones,
would be unable to meet that deadline.\52\ Assuming that those issuers
continued to satisfy the other conditions to Rule 12g3-2(b), they would
have to wait until the end of their current fiscal year and the start
of a new 120-day period before they could claim the exemption. We see
little benefit in making investors wait several months before being
able to gain electronic access to the issuer's material non-U.S.
disclosure documents in English.
---------------------------------------------------------------------------

    \52\ Under current Rule 12g3-2(b), several issuers have
requested Commission staff to accept their applications although the
120-day period has lapsed.
---------------------------------------------------------------------------

    As is currently the case, an issuer that, on the last day of its
most recently completed fiscal year, has not exceeded the 500 worldwide
holder threshold under Exchange Act Section 12(g), the 300 U.S. holder
threshold under Rule 12g3-2(a), or the $10 million annual asset
threshold under Rule 12g-1, could claim an exemption from Section 12(g)
registration for a class of equity securities based upon one or more of
those provisions, and would not have to comply with Rule 12g3-2(b)'s
conditions, if it chose not to rely on that rule for its exemption from
Section 12(g) registration. However, such an issuer would have to claim
the Rule 12g3-2(b) exemption, and satisfy all of its conditions, if it
sought to have established an ADR facility for its equity securities.
ADRs must be registered on a Form F-6, which requires an issuer of the
deposited securities to be either an Exchange Act reporting company or
have the Rule 12g3-2(b) exemption.
2. Deregistered Issuers
    A foreign private issuer that has suspended its Exchange Act
reporting obligations upon the filing of Form 15, pursuant to Rule 12g-
4 or 12h-3, or Form 15F, pursuant to Rule 12h-6, would satisfy the non-
reporting requirement upon the effectiveness of its deregistration,
assuming that it had not otherwise incurred additional Exchange Act
reporting obligations. Similarly, a foreign private issuer that
suspended its reporting obligations pursuant to the statutory terms of
Section 15(d) would satisfy the non-reporting condition immediately
upon its determination that it had less than 300 shareholders as of the
beginning of its most recent fiscal year.
    Thus, unlike the current rule, the proposed provision would not
require an issuer to look back over the previous eighteen months and
determine whether it had Exchange Act reporting obligations during that
period.\53\ We eliminated the eighteen month requirement when adopting
the March 2007 rule amendments that granted the Rule 12g3-2(b)
exemption automatically to a foreign private issuer upon the
effectiveness of its termination of Exchange Act registration and
reporting pursuant to Rule 12h-6. We see no reason to treat differently
foreign private issuers that have terminated their Section 12(g)
registration under the older Rule 12g-4 following the filing of a Form
15.\54\ Elimination of a lengthy waiting period would help hasten the
publishing of a foreign private issuer's non-U.S. disclosure documents
required under the exemption and, thus, help improve the ability of
U.S. investors to make informed decisions regarding that issuer's
securities.
---------------------------------------------------------------------------

    \53\ Exchange Act Rule 12g3-2(d)(1) provides that the Rule 12g3-
2(b) exemption is generally not available to a foreign private
issuer that, during the preceding 18 months, has registered a class
of securities under Exchange Act Section 12 or had an active or
suspended Section 15(d) reporting obligation.
    \54\ Although a qualifying prior Form 15 filer may terminate its
Exchange Act registration and reporting under Rule 12h-6, only a
small number have done so.
---------------------------------------------------------------------------

    For the same reason, proposed Rule 12g3-2(b) would eliminate the
current rule's general prohibition against making the exemption
available to an issuer that has had active or suspended reporting
obligations under Section 15(d) during a prescribed period.\55\ The
current rule precludes any issuer that suspended its reporting
obligations under Section 15(d) from ever being able to obtain the Rule
12g3-2(b) exemption, no matter how much time has elapsed from the
effectiveness of its suspension. We permitted an issuer to claim the
Rule 12g3-2(b) exemption immediately upon the effectiveness of its
deregistration under Rule 12h-6, although its reporting obligations
derived from Section 15(d). Similarly, we propose that an otherwise
eligible issuer could claim the Rule 12g3-2(b) exemption upon the
effectiveness of the suspension of its reporting obligations under
Section 15(d) or pursuant to Rule 12h-3 and following the filing of a
Form 15. As long as it has not once again incurred active Section 15(d)
reporting obligations,\56\ an issuer would be able to claim the Rule
12g3-2(b) exemption and publish its non-U.S. disclosure documents
accordingly.
---------------------------------------------------------------------------

    \55\ Rule 12g3-2(d)(1). Unlike under Section 12(g) and Rule 12g-
4, an issuer can only suspend, and cannot terminate, its reporting
obligations under Section 15(d) and Rule 12h-3.
    \56\ Following deregistration, an issuer would once again incur
Section 15(d) reporting obligations upon the effectiveness of a new
Securities Act registration statement.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed non-Exchange Act reporting
condition.
     Should we require an issuer not to have Exchange Act
reporting obligations as a condition to claiming the Rule 12g3-2(b)
exemption, as proposed?
     Should we permit an issuer that has Exchange Act reporting
obligations regarding a class of debt securities to claim the Rule
12g3-2(b) exemption for a class of equity securities without having
first to deregister the class of debt securities? Should we permit an
issuer that has Exchange Act reporting obligations regarding a
particular class of equity securities to claim the Rule 12g3-2(b)
exemption regarding a different class of equity securities?
     Should we permit an issuer to claim the Rule 12g3-2(b)
exemption if it meets the trading volume condition and the other
proposed conditions although the statutory 120-day period has lapsed,
as proposed? If not, why should we retain the 120-day statutory
requirement for Rule 12g3-2(b) when that provision pertains to a
shareholder-based requirement? What are the benefits to investors of
eliminating or retaining the 120-day requirement?

     Should we require an issuer not to have Exchange Act
reporting obligations over a specified period before claiming the
exemption? Should the specified period be 3, 6, 12, 18, or 24 months,
or some other specified period?
     Should we permit an otherwise eligible issuer to claim the
Rule 12g3-2(b) exemption immediately upon the termination of its
Section 12(g) registration or the suspension of its Section 15(d)
reporting obligations, as proposed?

B. Proposed Foreign Listing Condition

    As a second condition to the use of the Rule 12g3-2(b) exemption,
the proposed amendments would require an issuer currently to maintain a
listing of the subject class of securities on one or more exchanges 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. These proposed rule amendments are substantially similar to
the foreign listing condition and definition of primary trading market
adopted as part of the March 2007 amendments.\57\
---------------------------------------------------------------------------

    \57\ Exchange Act Rule 12h-6(a)(3) (17 CFR 240.12h-6(a)(3)) and
Exchange Act Rule 12h-6(f)(5) (17 CFR 240.12h-6(f)(5)).
---------------------------------------------------------------------------

    The purpose of the 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 foreign 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 in the U.S. over-the-counter market. This foreign
listing condition is also consistent with the Commission staff's past
and current practice of administering the Rule 12g3-2(b) exemption.
    The proposed rule amendments define primary trading market to mean
that at least 55 percent of the trading in the issuer's subject class
of securities took place in, on or through the facilities of a
securities market or markets in a single foreign jurisdiction or in no
more than two foreign jurisdictions during the issuer's most recently
completed fiscal year. The proposed amendments further instruct that,
if a foreign private issuer aggregates the trading of its subject class
of securities in two foreign jurisdictions for the purpose of this
paragraph, the trading for the issuer's securities in at least one of
the two foreign jurisdictions must be larger than the trading in the
United States for the same class of the issuer's securities.
    Like the 2007 amendments, the proposed amendments would permit an
issuer to aggregate its securities over multiple markets in one or two
foreign jurisdictions in recognition that many foreign private issuers
have listings on more than one exchange in one or more non-U.S.
markets. Unlike the earlier amendments, however, the proposed rule
amendments would not require an issuer establishing the exemption, but
not deregistering, to have maintained a foreign listing for the
previous twelve months, or for some other specified period of time,
since we see no reason to exclude newly listed foreign companies from
eligibility. We note that many foreign exchanges require substantial
initial disclosure before a listing is accepted. In addition, there is
currently no similar requirement for a non-reporting company applying
for the Rule 12g3-2(b) exemption.
    Under Rule 12h-6, an issuer must certify that, at the time it files
its Form 15F,\58\ it meets that rule's foreign listing requirement.
That issuer would also have to meet the proposed foreign listing
requirement upon the effectiveness of its Exchange Act termination of
registration and reporting under Rule 12h-6 in order to be able to
claim the Rule 12g3-2(b) exemption. Since typically that effectiveness
occurs 90 days from the date of filing of the Form 15F, we expect most
Form 15F filers will satisfy the proposed foreign listing requirement
under Rule 12g3-2(b).\59\
---------------------------------------------------------------------------

    \58\ 17 CFR 249.324. Similar to a Form 15, Form 15F is the form
that a foreign private issuer must file to certify that it meets the
conditions for terminating its Exchange Act registration and
reporting obligations under Rule 12h-6.
    \59\ Unless the Commission objects, termination of an issuer's
reporting and registration under Rule 12h-6 is effective 90 days
after the filing of its Form 15F. Exchange Act Rule 12h-6(g)(1) (17
CFR 240.12h-6(g)(1)).
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed foreign listing condition.
     Should we require an issuer to maintain a listing on one
or more exchanges in one or two foreign jurisdictions comprising its
primary trading market as a condition to the Rule 12g3-2(b) exemption,
as proposed? Should we require that the foreign exchange be part of a
recognized national market system or possess certain characteristics?
If so, what characteristics would be appropriate?
     Should we define primary trading market to mean that at
least 55 percent of the trading in the issuer's subject class of
securities took place in, on or through the facilities of a securities
market or markets in a single foreign jurisdiction or in no more than
two foreign jurisdictions during the issuer's most recently completed
fiscal year, as proposed? If not, is there another percentage, such as
50, 51, 60, or some other percent, that is more appropriate?
     Should we permit the trading volume in an issuer's primary
trading market to be less than 50 percent of its worldwide trading
volume as long as the primary trading market's trading volume is
greater than its U.S. trading volume?
     Should we also require that, if a foreign private issuer
aggregates the trading of its subject class of securities in two
foreign jurisdictions for the purpose of the foreign listing condition,
the trading for the issuer's securities in at least one of the two
foreign jurisdictions must be larger than the trading in the United
States for the same class of the issuer's securities, as proposed?
Should we instead permit an issuer to count the trading of its
securities only in one foreign jurisdiction or only on one exchange in
each of two foreign jurisdictions for the purpose of the foreign
listing condition?
     Are there a significant number of issuers that may be
listed on a foreign exchange but that would not meet the 55 percent
threshold under the primary trading market definition, for example, due
to being traded on more than two foreign exchanges, and which would
otherwise satisfy the current or proposed conditions of Rule 12g3-2(b)?
If so, what are specific examples of those issuers? Should we require
those issuers to meet a lower U.S. relative trading volume threshold to
be eligible for the Rule 12g3-2(b) exemption? If so, should the
threshold be 3, 5, 7, 10 or some other percent of worldwide trading
volume? What would be the advantages or disadvantages of such an
approach?
     Should we require an issuer to maintain a listing in its
jurisdiction of incorporation, organization or domicile instead of, or
in addition to, a listing in its primary trading market? Would such a
requirement increase the likelihood that a non-U.S. jurisdiction is
principally regulating the trading in an issuer's securities?
     Should we permit an unlisted issuer to claim the Rule
12g3-2(b) exemption as long as it publishes voluntarily the same
documents that a listed company is required to publish in its home
jurisdiction?

C. Proposed Quantitative Standard

1. Trading Volume Benchmark
    Proposed Rule 12g3-2(b) would permit an otherwise eligible issuer
to claim an exemption from Section 12(g) registration by meeting a
quantitative standard that does not depend on a count of the issuer's
U.S. holders. Under the proposed rule amendments, regardless of the
number of its U.S. holders, an issuer would be eligible to claim the
Rule 12g3-2(b) exemption if the average daily trading volume of the
subject class of securities in the United States for the issuer's most
recently completed fiscal year has been no greater than 20 percent of
the average daily trading volume of that class of securities on a
worldwide basis for the same period.\60\
---------------------------------------------------------------------------

    \60\ Proposed Exchange Act Rule 12g3-2(b)(3)(i).
---------------------------------------------------------------------------

    We adopted a trading volume benchmark as part of the 2007
amendments concerning foreign deregistration because we believed it to
be a more direct and less costly measure of the relative U.S. market
interest in a foreign private issuer's securities than one based on a
count of the issuer's shareholders.\61\ We believe the same
considerations apply to the proposed amendments of the rules that
determine when a foreign private issuer must register a class of equity
securities under Section 12(g). If only 20 percent or less of an
issuer's worldwide trading volume occurs in the United States, we
believe the relative U.S. market interest in those securities does not
warrant subjecting the issuer to Exchange Act reporting requirements.
---------------------------------------------------------------------------

    \61\ See Release No. 34-55540, Parts I.A and II.A.1.a.ii. We
also adopted a 20 percent trading volume benchmark in the definition
of ``substantial U.S. market interest'' under Regulation S. See 17
CFR 230.902(j).
---------------------------------------------------------------------------

    The 2007 amendments established a trading volume standard that
permits a qualified foreign private issuer to terminate its Exchange
Act registration and reporting obligations if its U.S. average daily
trading volume is no greater than 5 percent of its worldwide average
daily trading volume. We believe it is appropriate to have a stricter
trading volume standard for determining when an issuer may exit the
Exchange Act registration and reporting regime compared to when it must
enter that regime. In the former instance, an issuer has availed itself
of U.S. market facilities and filed Exchange Act reports upon which
U.S. investors have relied. A similar relationship exists between the
current shareholder-based standards governing entrance into and exit
from the Exchange Act reporting regime.\62\
---------------------------------------------------------------------------

    \62\ Compare Exchange Act Section 12(g)'s 500 or greater
shareholder standard compelling registration with the less than 300
U.S. or worldwide shareholder standard permitting deregistration
under Exchange Act Rules 12h-6, 12g-4 and 12h-3.
---------------------------------------------------------------------------

    The proposed rule amendments would require an issuer to calculate
U.S. and worldwide trading volume in the same fashion as under Rule
12h-6.\63\ Under that rule, when determining its U.S. average daily
trading volume, an issuer must include all transactions, whether on-
exchange or off-exchange. When determining its worldwide average daily
trading volume, an issuer must include on-exchange transactions, and
may include off-exchange transactions. The sources of trading volume
information may include publicly available sources, market data vendors
or other commercial information service providers upon which an issuer
has reasonably relied in good faith, and as long as the information
does not duplicate any other trading volume information obtained from
exchanges or other sources.
---------------------------------------------------------------------------

    \63\ The instructions for calculating trading volume are set
forth in Instruction 3 to Item 4 of Form 15F and in Release No. 34-
55540, Part II.A.1.a.ii.
---------------------------------------------------------------------------

    The proposed amendments would require an issuer to measure its
trading volume for its most recently completed fiscal year. In
contrast, Rule 12h-6 enables an issuer to make its trading volume
determinations for a recent 12-month period, which is defined as a 12-
calendar-month period that ended no more than 60 days before the filing
date of an issuer's Form 15F.\64\ A rolling 12-month period is
appropriate in the context of deregistration since the relevant rules
do not require an eligible issuer to deregister within a particular
time frame. However, we are not proposing a similar rolling 60-day
window for the Rule 12g3-2 amendments since Section 12(g) posits the
last day of an issuer's fiscal year as the measuring date for
determining whether an issuer must register a class of securities under
that statutory section.
---------------------------------------------------------------------------

    \64\ Exchange Act Rule 12h-6(f)(6) (17 CFR 240.12h-6(f)(6)).
---------------------------------------------------------------------------

2. Rule 12h-6 Issuers
    An issuer that terminates its Exchange Act registration and
reporting regarding a class of equity securities under Rule 12h-6 must
meet either that rule's trading volume benchmark or its record holder
standard.\65\ Rule 12h-6's trading volume standard requires an issuer's
U.S. trading volume to be no greater than 5 percent of its worldwide
trading volume, and to be measured over a recent 12-month period.\66\
Rule 12h-6's alternative record holder standard requires an issuer's
worldwide or U.S. holders to be less than 300.\67\ An issuer that has
proceeded under either of Rule 12h-6's quantitative provisions obtains
the Rule 12g3-2(b) exemption upon the termination of its registration
and reporting under Rule 12h-6.
---------------------------------------------------------------------------

    \65\ Exchange Act Rule 12h-6(a)(4) (17 CFR 240.12h-6(a)(4)).
Thus far, most issuers that have terminated their registration and
reporting requirements under Rule 12h-6 have relied on the trading
volume standard.
    \66\ Exchange Act Rule 12h-6(a)(4)(i) (17 CFR 240.12h-
6(a)(4)(i)). Rule 12h-6(f)(6) (17 CFR 240.12h-6(f)(6)) defines a
recent 12-month period to mean a 12-calendar-month period that ended
no more than 60 days before the filing date of Form 15F.
    \67\ Exchange Act Rule 12h-6(a)(4)(ii) (17 CFR 240.12h-
6(a)(4)(ii)).
---------------------------------------------------------------------------

    Because a Rule 12h-6 issuer will have met a more stringent trading
volume test, although most likely for a different 12-month period, we
do not believe it is necessary to require that issuer to recalculate
its relative U.S. trading volume for the previous 12 months upon the
effectiveness of its deregistration under Rule 12h-6 for the purpose of
determining whether it may claim the Rule 12g3-2(b) exemption.
Similarly, we believe that an issuer that has satisfied Rule 12h-6's
strict record holder standard should continue to be able to claim the
Rule 12g3-2(b) exemption upon the termination of its registration and
reporting under Rule 12h-6 as long as it meets the proposed Rule 12g3-
2(b) foreign listing requirement.
Comment Solicited
    We solicit comment on the proposed Rule 12g3-2(b) quantitative
provision.
     Should an issuer be able to claim the Rule 12g3-2(b)
exemption if the U.S. trading volume of its subject class of securities
is no greater than a specified percentage of its worldwide trading
volume for the previous 12 months, even if the number of its U.S.
shareholders is 300 or greater, as proposed?
     If so, should the U.S. trading volume standard be no
greater than 20 percent of worldwide trading volume, as proposed?
Should the U.S. trading volume standard instead be no greater than 5,
10, 15, 25, 30 or some other percent of worldwide trading volume?
     Is there another quantitative measure that is a more
appropriate measure of relative U.S. investor interest in a foreign
private issuer's securities than the proposed trading volume standard?

     Should we not impose any quantitative measure relating to
U.S. market interest when determining whether a foreign private issuer
should be subject to Exchange Act registration?
     Should we require an issuer to determine its relative U.S.
trading volume for its most recently completed fiscal year, as
proposed? If not, should the measuring period be a shorter period, such
as 3 or 6 months? Should it be a longer period, such as 18 or 24
months? Should the measuring period be the same as a recent 12-month
period, as under Rule 12h-6?
     Should we require an issuer to calculate its U.S. and
worldwide trading volumes as under Rule 12h-6, as proposed? Should we
require additional, or different, requirements or guidance regarding
off-exchange transactions?
     Should we permit an issuer's sources of trading volume
information to include publicly available sources, market data vendors
or other commercial information service providers upon which the issuer
has reasonably relied in good faith? Are there other parties or
services that we should specify as permissible sources of trading
volume information?
     Should we permit an issuer that has satisfied Rule 12h-6's
trading volume benchmark to claim the Rule 12g3-2(b) exemption upon the
effectiveness of its Rule 12h-6 deregistration, assuming it meets the
proposed Rule 12g3-2(b) foreign listing requirement, as proposed?
     Similarly should we permit an issuer that has satisfied
Rule 12h-6's alternative record holder condition to claim the Rule
12g3-2(b) exemption upon the effectiveness of its Rule 12h-6
deregistration as long as it meets the proposed Rule 12g3-2(b) foreign
listing requirement, as proposed?
     Are there some currently Rule 12g3-2(b)-exempt companies
that would lose the exemption upon the effectiveness of the proposed
rule amendments because their U.S. trading volume exceeds the proposed
threshold and the number of their U.S. holders is 300 or greater? If
so, are there a significant number of such companies and how should we
treat them? Should we provide a transition period for those companies
that would grant them a longer period of time before they would have to
register their securities under Exchange Act Section 12(g)? \68\ Should
we provide a ``grandfather'' provision or issue an order that would
permit issuers that have currently claimed the exemption under Rule
12g3-2(b), but would exceed the proposed trading volume threshold, to
continue to be exempt from Section 12(g) provided that they comply with
all other conditions? Provide specific examples of such companies.
---------------------------------------------------------------------------

    \68\ See Part II.L. of this release for discussion of a proposed
three-year transition period.
---------------------------------------------------------------------------

     Should we establish a different U.S. trading volume
threshold for companies from certain countries or regions, for example,
Canada, which may have a greater relative U.S. market presence than
other foreign companies? If so, should that threshold be 25, 30, 35 or
some higher percent of worldwide trading volume?

D. Proposed Electronic Publishing of Non-U.S. Disclosure Documents

1. Electronic Publishing Requirement To Claim Exemption
    Unless in connection with or following a recent Exchange Act
deregistration, in order to claim the Rule 12g3-2(b) exemption, the
proposed amendments would require an issuer to have published in
English, on its Internet Web site or through an electronic information
delivery system generally available to the public in its primary
trading market, information that, from the first day of its most
recently completed fiscal year, it:
     Has made public or been required to make public pursuant
to the laws of the country of its incorporation, organization or
domicile;
     Has filed or been required to file with the principal
stock exchange in its primary trading market on which its securities
are traded and which has been made public by that exchange; and
     Has distributed or been required to distribute to its
security holders.\69\
---------------------------------------------------------------------------

    \69\ Proposed Exchange Act Rule 12g3-2(b)(4)(i).

These are the same categories of information that the Commission has
historically required a non-reporting company to submit in paper when
applying for the exemption under Rule 12g3-2(b).\70\ They also are the
same non-U.S. disclosure documents that, more recently, the Commission
has required an issuer to publish electronically in order to maintain
its Rule 12g3-2(b) exemption claimed upon the effectiveness of its
deregistration under Rule 12h-6.\71\
---------------------------------------------------------------------------

    \70\ Exchange Act Rules 12g3-2(b)(1)(i).
    \71\ Exchange Act Rule 12g3-2(e)(2) (17 CFR 240. 12g3-2(e)(2)).
---------------------------------------------------------------------------

    The purpose of this non-U.S. publication condition is to provide
U.S. investors with ready access to material information when trading
in the issuer's equity securities in the over-the-counter market.\72\
This condition also would assist U.S. investors who are interested in
trading the issuer's securities in its primary securities market.
Moreover, having a foreign private issuer's key non-U.S. disclosure
documents electronically published in English would assist broker-
dealers in meeting their Rule 15c2-11 obligations to investors and
facilitate resales of that issuer's securities to qualified
institutional buyers under Rule 144A.
---------------------------------------------------------------------------

    \72\ Any trading of a foreign private issuer's Rule 12g3-2(b)
exempt securities in the United States would have to occur through
an over-the-counter market such as that maintained by the Pink
Sheets, LLC since, as of April, 1998, the NASD has 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).
---------------------------------------------------------------------------

    As under the current rule, the proposed amendments would require an
issuer only to publish electronically information that is material to
an investment decision regarding the subject securities, \73\ such as:
---------------------------------------------------------------------------

    \73\ Proposed Exchange Act Rule 12g3-2(b)(4)(ii). Athough the
substantive requirements are the same, we have proposed conforming
changes to General Instruction E and Part II, Item 9 of Form 15F to
reflect the proposed renumbering of the non-U.S. publication
requirements of Rule 12g3-2(b).
---------------------------------------------------------------------------

     Results of operations or financial condition;
     Changes in business;
     Acquisitions or dispositions of assets;
     The issuance, redemption or acquisition of securities;
     Changes in management or control;
     The granting of options or the payment of other
remuneration to directors or officers; and
     Transactions with directors, officers or principal
security holders.\74\
---------------------------------------------------------------------------

    \74\ These are the same types of information specified in
current Exchange Act Rule 12g3-2(b)(3)) (17 CFR 240.12g3-2(b)(3)).
---------------------------------------------------------------------------

    As is currently required of an issuer that has terminated its
Exchange Act registration and reporting obligations under Rule 12h-
6,\75\ the proposed rule amendments would require any issuer claiming
the Rule 12g3-2(b) exemption to publish electronically, at a minimum,
English translations of the following documents if in a foreign
language:
---------------------------------------------------------------------------

    \75\ Note 1 to Exchange Act Rule 12g3-2(e) (17 CFR 240.12g3-
2(e)).
---------------------------------------------------------------------------

     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.\76\
---------------------------------------------------------------------------

    \76\ Proposed Exchange Act Rule 12g3-2(b)(4)(iii).

These are the same documents for which the Commission staff has
historically required English translations because of their importance
to investors.\77\
---------------------------------------------------------------------------

    \77\ Current Rule 12g3-2(b)(4) (17 CFR 240.12g3-2(b)(4))
specifies only that press releases and shareholder communications
must be in English. It also states that an issuer may provide an
English summary or version instead of an English translation.
However, Commission staff has consistently administered the current
rule to require English translations of financial statements and the
other specified documents because of their importance to investors.
---------------------------------------------------------------------------

    As proposed, an issuer that claimed the Rule 12g3-2(b) exemption,
in connection with or following the recent effectiveness of its
Exchange Act deregistration, would not have to comply with the
electronic publication requirement for its last fiscal year.\78\ Since
a recently deregistered company will already have filed its Exchange
Act reports on EDGAR for its most recently completed fiscal year, such
a prior year publication requirement is not necessary to protect
investors.
---------------------------------------------------------------------------

    \78\ Proposed Note 3 to proposed Exchange Act Rule 12(g)3-2(b).
---------------------------------------------------------------------------

2. Electronic Publishing Requirement To Maintain Exemption
    In order to maintain the Rule 12g3-2(b) exemption, the proposed
amendments would require an issuer to publish the same information
specified in the prior fiscal year provision, on an ongoing basis and
for subsequent fiscal years, on its Internet Web site or through an
electronic information delivery system in its primary trading
market.\79\ This requirement would apply to any issuer claiming the
exemption, whether or not a former Exchange Act registrant. Like the
prior fiscal year publication condition, this ongoing publication
condition would help assure that investors and other market
participants have access to an issuer's specified non-U.S. disclosure
documents, in English, which are material to an investment decision.
---------------------------------------------------------------------------

    \79\ Proposed Exchange Act Rule 12g3-2(c)(1).
---------------------------------------------------------------------------

    Similar to the current rule,\80\ the proposed rule amendments would
require an issuer to publish electronically its non-U.S. disclosure
documents promptly after the information has been made public, pursuant
to its home jurisdiction laws, non-U.S. stock exchange rules, or
shareholder rules and practices.\81\ As under current Commission staff
practice, what constitutes ``promptly'' would depend on the type of
document and the amount of time required to prepare an English
translation. Currently an issuer typically must electronically publish
or submit in paper a copy of a material press release on the same
business day of its original publication.
---------------------------------------------------------------------------

    \80\ Exchange Act Rule 12g3-2(b)(1)(iii).
    \81\ Proposed Exchange Act Rule 12g3-2(c)(2). Form 6-K imposes a
similar requirement.
---------------------------------------------------------------------------

    The proposed amendments would permit an issuer to meet Rule 12g3-
2(b)'s electronic publication requirement concurrently with the
publishing in English of a non-U.S. disclosure document through an
electronic information delivery system generally available to the
public in its primary trading market. Thus, if an issuer's non-U.S.
stock exchange or securities regulatory authority permits the issuer to
publish electronically a required report on its electronic delivery
system, and the public has ready access to the report and other
documents maintained on the system,\82\ that electronic publication
solely would satisfy the proposed Rule 12g3-2(b)'s electronic
publishing requirements.
---------------------------------------------------------------------------

    \82\ An example of such a system is the System for Electronic
Document Analysis and Retrieval (``SEDAR'') maintained by the
Canadian Securities Administrators.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed condition requiring an issuer to
publish electronically its non-U.S. disclosure documents.
     Should we require an issuer to publish its non-U.S.
disclosure documents, made public since the beginning of its most
recently completed fiscal year, on its Internet Web site or through an
electronic information delivery system in its primary trading market,
as a condition to claiming the Rule 12g3-2(b) exemption, other than in
connection with or following the issuer's recent deregistration, as
proposed? Should we also require an issuer that has recently
deregistered to publish those non-U.S. disclosure documents on its
Internet Web site or through an electronic information delivery system
if it has not already done so as a condition to claiming the exemption?
     Should we require an issuer to publish electronically its
non-U.S. disclosure documents on an ongoing basis and for subsequent
fiscal years as a condition to maintaining the Rule 12g3-2(b)
exemption, as proposed?
     Since one purpose of the proposed foreign listing
condition is to increase the likelihood that another jurisdiction has
regulatory oversight of an issuer, should we expand the jurisdictional
scope of the required non-U.S. disclosure documents such that it
includes all documents that the issuer has made or is required to make
public under the law of any jurisdiction in its primary trading market?
Should all documents, provided they are material, required to be
published by an issuer pursuant to any governmental authority or stock
exchange be included in the scope of non-U.S. disclosure documents?
     Where an issuer is organized in one jurisdiction and
domiciled in another, should the issuer have to comply voluntarily with
the obligations of both jurisdictions, or only one? If only one, should
the issuer be permitted to elect which one or should the manner of
choosing be specified by rule? If so, what standards should govern the
decision?
     For both the conditions to claim and maintain the Rule
12g3-2(b) exemption, should we require an issuer to publish
electronically the types of information deemed to be material as
specified in the proposed rule? Are there other types of information
that should be expressly stated in the non-exclusive list of deemed
material information? Are there types of information that should be
excluded from the list of required material documents?
     For both the conditions to claim and maintain the Rule
12g3-2(b) exemption, should we permit an issuer to publish its non-U.S.
disclosure documents through an electronic information delivery system
that is generally available to the public, even if that system is
located outside of the issuer's primary trading market?
     Should we permit an issuer to satisfy the rule's
electronic publication requirements concurrently with the publishing of
its non-U.S. disclosure document through an electronic information
delivery system that is generally publicly available in the issuer's
primary trading market, as proposed? Should we also require the issuer
to publish its non-U.S. document on its Internet Web site?
     Is it reasonable to expect that all electronic information
delivery systems that are generally available to the public will be
accessible and useable by U.S. investors? Should we require an issuer
to publish its non-U.S. disclosure documents on its Internet Web site
if the electronic delivery system is not navigable in English or
requires users to register or pay a fee for access? Should we require
an issuer to note on its Internet Web site that documents supplied to
maintain the Rule 12g3-2(b) exemption are available on an electronic

delivery system, and provide a link to that system?
     Should we require an issuer to publish electronically an
English translation of the specified non-U.S. documents, as proposed?
Are there other documents that should be subject to an English
translation requirement? Should we exclude any of the specified
documents from the English translation requirement? Will a translation
requirement into English inadvertently encourage issuers to provide the
minimal level of disclosure in their primary trading market in order to
limit the burden of translating such documents into English?
     Should we provide specific guidance regarding when an
issuer may provide an English summary instead of a line-by-line English
translation of a required non-U.S. disclosure document? For example,
should we permit an issuer to provide English summaries of certain non-
U.S. documents, for example, interim reports, or sections of such
reports, that do not contain financial statements, and other foreign
language documents for which English summaries are permitted under
cover of Form 6-K, as long as the English summaries are permitted by,
and meet the requirements of Exchange Act Rule 12b-12(d)?\83\
---------------------------------------------------------------------------

    \83\ 17 CFR 240.12b-12(d).
---------------------------------------------------------------------------

     Should we require an issuer to publish electronically a
non-U.S. document required to be filed with its non-U.S. regulator or
non-U.S. exchange, but which is not made public by that non-U.S.
regulator or non-U.S. exchange, if it is material to investors?
     Should we require an issuer to maintain the publishing of
specified documents on its Internet Web site for a particular length of
time? If so, which documents and for what length? For example, should
we require an issuer to post its annual report on its Internet Web site
for 1, 2 or 3 years, interim or current reports for 1 or 2 years, and
press releases for 6 months or 1 year?
     Should we require an issuer to commence publishing
electronically the required non-U.S. disclosure documents before the
date that its Section 12(g) registration statement would be due, as a
condition to the Rule 12g3-2(b) exemption?
     For the condition to maintain the Rule 12g3-2(b)
exemption, should we require an issuer to publish electronically a
required non-U.S. disclosure document promptly after the document has
been published pursuant to its home jurisdiction laws, stock exchange
rules, or shareholder rules and practices, as proposed? Should we
instead provide a particular due date for the electronic publication of
a specified document?
     Should the Commission permit or require an issuer to
publish its non-U.S. disclosure documents on EDGAR or through another
specified central electronic repository for documents instead of
requiring the publishing of those documents on an issuer's Internet Web
site or through an electronic information delivery system in its
primary trading market?

E. Proposed Elimination of the Written Application Requirement

    Currently in order to obtain the Rule 12g3-2(b) exemption, if not
proceeding under Rule 12h-6, a foreign private issuer must submit
written materials, typically in the form of a letter application, to
the Commission. These materials must include a list of the issuer's
non-U.S. disclosure requirements, the number of U.S. holders of its
subject securities and the percentage of outstanding shares held by
them, the circumstances in which its U.S. holders acquired those
securities, and the date and circumstances of the most recent public
distribution of the securities of the issuer or its affiliate.\84\ As
part of the written application, an issuer must also submit copies of
its non-U.S. disclosure documents published since the first day of its
most recently completed fiscal year.\85\ An issuer must submit this
information, together with all of the supporting documents, in paper
only.
---------------------------------------------------------------------------

    \84\ Exchange Act Rules 12g3-2(b)(1), (2) and (5). An issuer is
also required to furnish a revised list of its non-U.S. disclosure
requirements at the end of any fiscal year in which those
requirements changed. Rule 12g3-2(b)(1)(iv) (17 CFR 240.12g3-
2(b)(1)(iv)).
    \85\ Exchange Act Rule 12g3-2(b)(1)(i).
---------------------------------------------------------------------------

    We are proposing to eliminate Rule 12g3-2(b)'s written application
process for all foreign private issuers. As proposed, an issuer may
claim the Rule 12g3-2(b) exemption as long as it satisfies the rule's
conditions. This proposal is consistent with our adoption of an
automatic grant of the Rule 12g3-2(b) exemption upon the effectiveness
of an issuer's deregistration under Rule 12h-6. Moreover, since we are
proposing to permit an issuer to claim the Rule 12g3-2(b) exemption
based on a trading volume measure, regardless of the number of its U.S.
shareholders, the current shareholder information requirement would be
of marginal use. Further, since, as proposed, as a condition to
claiming and maintaining the Rule 12g3-2(b) exemption, an issuer would
have to publish electronically its non-U.S. disclosure documents,
investors would be able to ascertain many of the issuer's non-U.S.
disclosure requirements from a review of those publicly available
documents.\86\
---------------------------------------------------------------------------

    \86\ From time to time, the Commission has published a list of
issuers claiming the Rule 12g3-2(b) exemption that have submitted
relatively current information pursuant to that rule. See, for
example, Release No. 34-51893 (June 21, 2005), 70 FR 37128 (June 28,
2005). Commission staff has compiled this list based on a review of
submitted paper documents. As part of the streamlining of the Rule
12g3-2(b) process that the proposed rule amendments are intended to
effect, the Commission anticipates it would no longer publish these
lists subsequent to the effective date of the new rules.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed elimination of the written
application process for the Rule 12g3-2(b) exemption.
     Should we permit an issuer, which has not terminated its
registration and reporting obligations under Rule 12h-6, to claim the
Rule 12g3-2(b) exemption as long as it meets the proposed rule's
conditions, without submitting a written application to the Commission,
as proposed?
     Should we continue to permit an issuer to claim the Rule
12g3-2(b) exemption automatically upon the effectiveness of its
deregistration under Rule 12h-6, as proposed?
     As a condition of claiming or maintaining the Rule 12g3-
2(b) exemption, should we require an issuer to publish, and to update
as necessary, a list of its non-U.S. disclosure requirements on its
Internet Web site or its primary trading market's electronic
information delivery system?
     As a condition of claiming or maintaining the Rule 12g3-
2(b) exemption, should we require an issuer to publish electronically
other information with respect to its eligibility for the Rule 12g3-
2(b) exemption, for example, identification of its non-U.S. primary
market, and its U.S. trading volume as a percentage of its worldwide
trading volume for its most recently completed fiscal year?
     What use do investors currently make of the information
contained in an initial application under Rule 12g3-2(b)? Does it
assist them in making informed investment decisions?
     If it is appropriate to eliminate the application process
for the Rule 12g3-2(b) exemption, as proposed, should we at least
require an issuer to notify the Commission that it is claiming the Rule
12g3-2(b) exemption? If so, what form should the notification take?
Would the filing of an amended Form F-6, as proposed, serve as
sufficient notice for most issuers claiming the Rule 12g3-2(b)
exemption?

     What effects, if any, would the proposed elimination of
the written application requirement and the lack of a formal notice
requirement have on other market participants, for example, broker-
dealers and their ability to fulfill their Rule 15c2-11 obligations to
investors or facilitate the resale of a foreign company's securities to
QIBs in the United States under Securities Act Rule 144A?

F. Proposed Duration of the Amended Rule 12g3-2(b) Exemption

    The proposed Rule 12g3-2(b) exemption would remain in effect for as
long as a foreign private issuer satisfies the electronic publication
condition, or until:
     The issuer no longer maintains a listing for the subject
class of securities on one or more exchanges in its primary trading
market;
     The average daily trading volume of the subject class of
securities in the United States exceeds 20 percent of the average daily
trading volume of that class of securities on a worldwide basis for the
issuer's most recently completed fiscal year, other than the year in
which the issuer first claims the exemption; or
     The issuer registers a class of securities under Section
12 of the Act or incurs reporting obligations under Section 15(d) of
the Act.\87\
---------------------------------------------------------------------------

    \87\ Proposed Rule 12g3-2(d).

This proposed duration would apply to both non-reporting issuers as
well as issuers claiming the Rule 12g3-2(b) exemption following their
deregistration pursuant to Rule 12h-6, 12g-4, or 12h-3 or the statutory
terms of Section 15(d).
    The proposed duration of the amended Rule 12g3-2(b) exemption is
similar to the duration of the current exemption. Both depend on an
issuer's continued compliance with the non-U.S. publication
requirements. Under both provisions, Section 12 registration or the
incurrence of Section 15(d) reporting obligations terminates the
exemption.\88\ Moreover, currently, if an issuer can no longer claim
the Rule 12g3-2(b) exemption because it has not complied with the
rule's non-U.S. publication requirements, it must determine on the last
day of the fiscal year whether, because of its record holder count, it
must register a class of securities under Section 12(g). The same would
hold true under the proposed rule amendments for a non-compliant
issuer.
---------------------------------------------------------------------------

    \88\ See, for example, Exchange Act Rule 12g3-2(e)(3) (17 CFR
240.12g3-2(e)(3)).
---------------------------------------------------------------------------

    As proposed, an issuer would lose the Rule 12g3-2(b) exemption if
it no longer was listed on an exchange in its primary trading market.
We believe this provision is necessary in order to help ensure the
continued availability of a set of non-U.S. disclosure documents to
which investors may turn when making decisions regarding an issuer's
securities. We imposed a similar foreign listing condition when we
adopted Rule 12h-6, although we did not explicitly provide that an
issuer that ceased to meet the foreign listing condition would not be
eligible to claim or maintain the Rule 12g3-2(b) exemption following
its deregistration under Rule 12h-6. The proposed amendments would
clarify that, because of the importance of the foreign listing
requirement, any issuer that ceases to comply with that requirement
would lose the Rule 12g3-2(b) exemption.
    Under the proposed rule amendments, if relying on Rule 12g3-2(b)'s
20 percent trading volume standard, an issuer would have to determine
at the end of each fiscal year, other than the year in which it first
claims the exemption, whether it still met that standard, even if the
issuer was in compliance with the non-U.S. publication requirements. We
believe this treatment is warranted in order to protect investors.
Moreover, trading volume information is more easily obtainable than
information regarding a foreign private issuer's U.S. and worldwide
shareholders, and the trading volume standard provides a more direct
measure of relative U.S. market interest in an issuer's securities. An
issuer would not have to make the trading volume determination for the
fiscal year in which the issuer first claimed the exemption, however,
in order to provide a reasonably long enough period to assess relative
U.S. market interest for the issuer's securities.
Comment Solicited
    We solicit comment on the proposed duration of the Rule 12g3-2(b)
exemption.
     Should an issuer be able to claim the Rule 12g3-2(b)
exemption only for as long as it complies with the rule's non-U.S.
publication requirement, as proposed?
     Should an issuer lose the Rule 12g3-2(b) exemption if its
U.S. trading volume exceeds 20 percent of its worldwide trading volume
for its most recently completed fiscal year, other than the year in
which the issuer first claimed the exemption, even if the issuer has
fully complied with Rule 12g3-2(b)'s non-U.S. jurisdiction publication
requirement, as proposed? Should an issuer have to make the trading
volume determination for the fiscal year in which the issuer first
claims the exemption as well? Or should compliance with the rule's non-
U.S. publication and foreign listing requirements suffice as a basis
for continuing the exemption, regardless of the relative U.S. trading
volume of its securities?
     Should an issuer be able to claim the Rule 12g3-2(b)
exemption only for as long as it maintains a listing in its primary
trading market, as proposed? Should it instead be able to continue to
claim the exemption if, despite being delisted in its primary trading
market, it voluntarily continues to publish electronically the
documents required by its former foreign exchange and its U.S. trading
volume remains at 20 percent or less of its worldwide trading volume?
     Should an issuer no longer be able to claim the Rule 12g3-
2(b) exemption if it registers the same or a different class of
securities under Exchange Act Section 12(g) or incurs reporting
obligations as to such a class under Section 15(d), as proposed? Should
an issuer instead be able to maintain the Rule 12g3-2(b) exemption for
a class of equity securities if it incurs Section 15(d) reporting
obligations regarding debt securities?
     Should other factors or conditions cause an issuer to lose
the Rule 12g3-2(b) exemption? For example, if an issuer sells a
significant percentage of its equity securities to U.S. investors in
one or more exempt transactions during a specified period of time, such
as six months or a year, should it be able to continue to claim the
Rule 12g3-2(b) exemption as long as its U.S. trading volume does not
exceed 20 percent of its worldwide trading volume at the end of that
year? Is there a point when the percentage of outstanding shares owned
by U.S. investors becomes as or more important than relative U.S.
trading volume as a measure of U.S. market interest for determining the
duration of the Rule 12g3-2(b) exemption? If so, what is that point?

G. Proposed Elimination of the Successor Issuer Prohibition

    Currently an issuer may not obtain the Rule 12g3-2(b) exemption if,
following the issuance of shares to acquire by merger, consolidation,
exchange of securities or acquisition of assets, it has succeeded to
the Exchange Act reporting obligations of another issuer.\89\ The sole
exception has been for

Canadian companies that registered the securities to be issued in the
transaction on specified MJDS registration statements under the
Securities Act.\90\
---------------------------------------------------------------------------

    \89\ Exchange Act Rule 12g3-2(d)(2). An issuer succeeds to the
Exchange Act reporting obligations of another either under Exchange
Act Rule 12g-3 (17 CFR 240. 12g-3) or 15d-5 (17 CFR 240.15d-5).
    \90\ The specified MJDS registration statements are Forms F-8,
F-9, F-10 and F-80 (17 CFR 239.38, 239.39, 239.40, and 239.41).
---------------------------------------------------------------------------

    As part of the 2007 rule amendments, we adopted a provision that
permits a successor issuer to terminate its newly acquired Exchange Act
reporting obligations as long as it meets Rule 12h-6's substantive
requirements for equity or debt securities issuers.\91\ That provision
permits a successor issuer to take into account the reporting history
of its predecessor when determining whether it meets Rule 12h-6's prior
reporting condition.\92\ Under that rule, a non-Exchange Act reporting
foreign private issuer that has acquired a reporting foreign private
issuer in a transaction exempt under the Securities Act, for example,
under Rule 802 \93\ or Securities Act Section 3(a)(10),\94\ may 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 acquired company's reporting history fulfills Rule 12h-
6's prior reporting condition and the successor issuer meets the rule's
other conditions.
---------------------------------------------------------------------------

    \91\ 17 CFR 240.12h-6(d).
    \92\ Exchange Act Rule 12h-6(d)(2) (17 CFR 240.12h-6(d)(2)).
    \93\ Securities Act Rule 802 (17 CFR 230.802).
    \94\ 15 U.S.C. 77c(a)(10).
---------------------------------------------------------------------------

    When adopting Rule 12h-6's successor issuer provision, we amended
Exchange Act Rule 12g3-2(d) to permit a successor issuer to claim the
Rule 12g3-2(b) exemption upon the effectiveness of its termination of
Exchange Act registration and reporting under Rule 12h-6. We see no
reason to treat differently a successor issuer that qualifies for
deregistration under one of the older exit rules or under Section
15(d). Accordingly, we propose to eliminate the successor issuer
provision in its entirety, which would permit a successor issuer to
claim the Rule 12g3-2(b) exemption upon the effectiveness of its exit
from the Exchange Act reporting regime whether under Rule 12h-6, 12g-4
or 12h-3 or Section 15(d).
Comment Solicited
    We solicit comment on the proposed elimination of the successor
issuer prohibition.
     Should we permit a successor issuer to claim the Rule
12g3-2(b) exemption upon the effectiveness of its exit from the
Exchange Act reporting regime under Rule 12g-4, Rule 12h-3 or Section
15(d), as proposed?

H. Proposed Elimination of the Rule 12g3-2(b) Exception for MJDS Filers

     When the Commission adopted its Multijurisdictional Disclosure
System (MJDS) for Canadian issuers, it amended Rule 12g3-2 to make the
Rule 12g3-2(b) exemption available to Canadian issuers that have only
filed with the Commission specified MJDS registration statements,\95\
although they may have filed those registration statements within the
previous 18 months or to effect transactions in which they would
succeed to Exchange Act reporting obligations.\96\ The reason for these
exemptions was to encourage Canadian issuers to use the MJDS.\97\
Bercause the proposed amendments would eliminate the 18 month and
successor issuer prohibitions under Rule 12g3-2(b), they would remove
as unnecessary the MJDS filer exceptions to those prohibitions.
---------------------------------------------------------------------------

    \95\ Release No. 33-6902 (June 21, 1991), 56 FR 30036 (July 1,
1991). The MJDS generally permits a qualified Canadian issuer to
file with the Commission its Canadian registration statements and
reports under cover of the MJDS forms.
    \96\ Exchange Act Rules 12g3-2(d)(1) and (2).
    \97\ Release No. 33-6879 (October 22, 1990), 55 FR 462881
(November 2, 1990), as adopted in Release No. 33-6902.
---------------------------------------------------------------------------

    When adopting the MJDS, the Commission also permitted a Canadian
issuer that already had the Rule 12g3-2(b) exemption, but that
subsequently acquired Exchange Act reporting obligations as a MJDS
filer, for example, with regard to a class of debt securities, to
retain the Rule 12g3-2(b) exemption for its equity securities. The
Commission permitted that issuer to submit its non-U.S. disclosure
documents simultaneously to fulfill its Exchange Act reporting
obligations under the MJDS and its non-U.S. publication obligations
under Rule 12g3-2(b). The Commission then amended Form 40-F \98\ and
Form 6-K \99\ to require an issuer to disclose on the cover page that
it was filing the form for that dual purpose.\100\ Under the current
rules, a Canadian issuer that checks the appropriate box on the cover
of each filed Form 40-F and submitted Form 6-K is able to use those
Exchange Act reports to maintain its Rule 12g3-2(b) exemption as well.
---------------------------------------------------------------------------

    \98\ 17 CFR 249.240f. Form 40-F is the MJDS form used for the
filing of an Exchange Act registration statement or annual report.
    \99\ Like non-MJDS foreign registrants, a MJDS filer uses Form
6-K to submit its interim home jurisdiction documents.
    \100\ Release Nos. 33-6902 and 33-6879.
---------------------------------------------------------------------------

    This dual use of MJDS Exchange Act reports was reasonable at the
time that the Commission adopted the MJDS since a Canadian issuer had
to file or submit substantially the same Canadian disclosure documents
for Exchange Act purposes as it did to maintain the Rule 12g3-2(b)
exemption. However, this is no longer the case. Since the enactment of
the Sarbanes-Oxley Act,\101\ and Commission rules adopted under that
Act, Canadian issuers must respond to several U.S. disclosure
requirements when preparing their Form 40-F annual reports.\102\
---------------------------------------------------------------------------

    \101\ Pub. L. 107-204, 116 Stat. 745 (2002).
    \102\ See, for example, Form 40-F's certifications required
concerning an issuer's disclosure controls and procedures and its
internal controls over financial reporting, and the disclosure
required concerning its audit committee financial expert, its code
of ethics, and its off-balance sheet arrangements.
---------------------------------------------------------------------------

     Accordingly, we are proposing to eliminate the current, but rarely
used, ability of a Canadian company, which has Exchange Act reporting
obligations solely from having filed an effective MJDS registration
statement under the Securities Act, to claim simultaneously the Rule
12g3-2(b) exemption. Under the proposed rule amendments, a MJDS
registrant would be eligible to claim the Rule 12g3-2(b) exemption on
the same grounds as other foreign registrants. If it has recently
exited the Exchange Act reporting regime under Rule 12h-6, 12g-4 or
12h-3 or Section 15(d), it could claim the exemption, assuming it
satisfied the proposed rule amendments' other conditions. Otherwise,
the filing of a MJDS registration statement under the Securities Act or
Exchange Act would trigger Exchange Act reporting obligations and
preclude that issuer from claiming the exemption.\103\
---------------------------------------------------------------------------

    \103\ The proposed amendments would remove the instruction on
the cover page of Form 40-F and Form 6-K requiring a registrant to
indicate whether it also was furnishing the materials pursuant to
Rule 12g3-2(b).
---------------------------------------------------------------------------

Comment Solicited
     We solicit comment on the proposed elimination of the Rule 12g3-
2(b) exception for MJDS filers.
     Should we eliminate the ability of a MJDS issuer to claim
the Rule 12g3-2(b) exemption while having Exchange Act reporting
obligations, as proposed?

I. Proposed Elimination of the ``Automated Inter-Dealer Quotation
System'' Prohibition and Related Grandfathering Provision

     Under the existing rules, a foreign private issuer generally may
not claim the Rule 12g3-2(b) exemption if it has securities or ADRs
quoted in the United States on an automated inter-dealer quotation
system,\104\ which, until recently, referred to the inter-dealer
quotation system administered by the National Association of Securities

Dealers Inc., and known as Nasdaq. The Commission adopted this
prohibition in 1983 because of its belief that, since its establishment
in 1971, Nasdaq had so matured into a trading system with substantial
similarities to a national securities exchange that Nasdaq-traded
companies should be required to meet the same disclosure standards as
exchange-traded companies.\105\ We are proposing to eliminate this
prohibition because Nasdaq has since become a national securities
exchange.\106\
---------------------------------------------------------------------------

    \104\ Exchange Act Rule 12g3-2(d)(3) (17 CFR 240.12g3-2(d)(3)).
    \105\ Release No. 34-20264 (October 6, 1983), 48 FR 46736
(October 14, 1983).
    \106\ Nasdaq ceased operations as an automated inter-dealer
quotation system and became a national securities exchange effective
August 1, 2006. See Release No. 34-53128 (January 13, 2006), 71 FR
3550 (January 23, 2006).
---------------------------------------------------------------------------

     When the Commission adopted the automatic inter-dealer quotation
system prohibition, it recognized that the general prohibition could
cause some Nasdaq-quoted foreign companies that already had obtained
the Rule 12g3-2(b) exemption to withdraw from Nasdaq. Therefore, the
Commission excepted from that prohibition securities that:
     Were quoted on Nasdaq on October 5, 1983 and have been
continuously traded since;
     were exempt under Rule 12g3-2(b) on October 5, 1983 and
have remained so since; and
     after January 2, 1986, were issued by a non-Canadian
company.\107\
---------------------------------------------------------------------------

    \107\ Exchange Act Rule 12g3-2(d)(3). The Commission based the
more limited grandfathering of Canadian securities on the more
active U.S. market for those securities, which had led to abuses
under Rule 12g3-2(b). Release No. 34-20264.
---------------------------------------------------------------------------

     Since the adoption of this grandfathering provision, only nine of
the grandfathered issuers remain listed on Nasdaq.\108\ Pursuant to
Commission order, Nasdaq is now a national securities exchange, and
these issuers must register their securities under Exchange Act Section
12(b) \109\ by August 1, 2009 if they wish to remain listed on
Nasdaq.\110\ Given these developments, we no longer believe it is
necessary to maintain the grandfathering provision for those Nasdaq-
listed companies. Pursuant to the terms of the Commission order, as
long as the nine grandfathered issuers continue to comply with the
conditions of Rule 12g3-2(b), brokers and dealers may trade their
securities in reliance on the Rule 12g3-2(b) exemption until the above
deadline for Exchange Act registration.
---------------------------------------------------------------------------

    \108\ Letter from Edward S. Knight to Nancy M. Morris (July 31,
2006), attached to Release No. 34-54240 (July 31, 2006), 71 FR 45246
(August 8, 2006).
    \109\ 15 U.S.C. 78l(b).
    \110\ Release No. 34-54241 (July 31, 2006), 71 FR 45359 (August
8, 2006). The Commission granted the grandfathered issuers an
additional three years to register their securities under Section
12(b) in order to avoid disruptions in the trading of their
securities caused by their delisting from Nasdaq and to provide them
with time to meet U.S. disclosure requirements.
---------------------------------------------------------------------------

Comment Solicited
    We solicit comment on the proposed elimination of Rule 12g3-2(b)'s
automatic inter-dealer quotation system prohibition and related
grandfathering provision.
     Should we eliminate the automatic inter-dealer quotation
system prohibition, as proposed?
     Are there alternative trading systems or other non-
exchange trading platforms that raise similar concerns as those that
caused the Commission to adopt the Nasdaq-focused automatic inter-
dealer quotation system prohibition? If so, should we prohibit an
issuer whose securities are traded on those non-exchange systems from
relying on the Rule 12g3-2(b) exemption?
     Should we eliminate the grandfathering provision to Rule
12g3-2(b)'s automatic inter-dealer quotation system prohibition, as
proposed?

J. Proposed Revisions to Form F-6

    We propose to make one revision to Form F-6, the registration
statement used to register ADRs under the Securities Act. Currently a
registrant of ADRs must state on Form F-6 that the issuer of the
deposited securities against which the ADRs will be issued is either an
Exchange Act reporting company or furnishes public reports and other
documents to the Commission pursuant to Rule 12g3-2(b). The proposed
revision would require a Form F-6 registrant to state that, if the
issuer of deposited securities is not an Exchange Act reporting
company, such issuer publishes information in English required to
maintain the Rule 12g3-2(b) exemption on its Internet Web site or
through an electronic information delivery system generally available
to the public in its primary trading market. The registrant would also
have to disclose the issuer's address of its Internet Web site or the
electronic information delivery system in its primary trading
market.\111\
---------------------------------------------------------------------------

    \111\ Proposed amended Part I, Item 2 of Form F-6.
---------------------------------------------------------------------------

    Currently an ADR facility may be either sponsored or
unsponsored.\112\ Under our current regulations, in order for a
depositary bank to establish an ADR facility with respect to the shares
of a specific foreign private issuer, the issuer must either be an
Exchange Act reporting company or furnish public reports and other
documents to the Commission pursuant to Rule 12g3-2(b). As a result, a
foreign private issuer that does not seek to have its securities traded
in the United States in the form of ADRs is able, by not formally
claiming the Rule 12g3-2(b) exemption and submitting documents to the
Commission, to restrict the ability of ADR depositary banks to
establish an unsponsored ADR facility.
---------------------------------------------------------------------------

    \112\ With a sponsored facility, the issuer of the deposited
securities is a party to the deposit agreement along with the
depositary and is able to exercise some control regarding the terms
and operations of the facility. With an unsponsored facility, the
depositary solely controls the terms and operations of the facility.
---------------------------------------------------------------------------

    We are not proposing to revise our requirement under Form F-6 that
the issuer of the deposited securities be either an Exchange Act
reporting company or be exempt from registration under Rule 12g3-2(b).
Because we are proposing to expand the availability of the Rule 12g3-
2(b) exemption so that it will be available to all otherwise eligible
foreign private issuers that post materials to their Web sites or make
them available through an electronic information delivery system in
their primary trading market, ADR depositaries will be able to
establish unsponsored ADRs on this expanded group of foreign private
issuers. ADR depositaries will also be able to establish sponsored ADR
facilities with foreign private issuers that choose to have their
shares represented by ADRs in the United States.
Comment Solicited
     Should we require a Form F-6 registrant to disclose on
Form F-6 that, if the issuer of deposited securities is not an Exchange
Act reporting company, such issuer electronically publishes the
documents required to maintain the Rule 12g3-2(b) exemption, and to
provide the address of the issuer's Internet Web site or electronic
information delivery system in its primary trading market, as proposed?
     Should we clarify the proposed requirement that a
registrant that already has an effective Form F-6 for either a
sponsored or unsponsored facility has to disclose the address where the
issuer of the underlying securities has electronically published its
non-U.S. disclosure documents under Rule 12g3-2(b) when the registrant
files its first post-effective amendment to the Form F-6 following the
effective date of the proposed rule amendments, as intended?
     Should we delete the requirement under Form F-6 that the
foreign private issuer whose securities are to be represented by an ADR
be an Exchange

Act reporting company or be exempt from registration under Rule 12g3-
2(b)?
     As a condition to the registration of ADRs on Form F-6
relating to the shares of a foreign private issuer, should we require
that the issuer give its consent to the depositary? Should we require
that the depositary have notified the foreign private issuer of its
intention to register ADRs and have either received an affirmative
statement of no objection from the issuer or not received an
affirmative statement of objection from the issuer?

K. Proposed Amendment of Exchange Act Rule 15c2-11

    Exchange Act Rule 15c2-11 \113\ contains requirements that are
intended to deter broker-dealers from initiating or resuming quotations
for covered over-the-counter securities that may facilitate a
fraudulent or manipulative scheme. The Rule currently prohibits a
broker-dealer from publishing (or submitting for publication) a
quotation for a covered over-the-counter security in a quotation medium
unless it has obtained and reviewed current information about the
issuer.\114\ One of the specified types of information required by Rule
15c2-11 is information furnished to the Commission pursuant to Rule
12g3-2(b). A broker-dealer must make this information reasonably
available upon request to any person expressing an interest in a
proposed transaction involving the security with the broker-
dealer.\115\
---------------------------------------------------------------------------

    \113\ 17 CFR 240.15c2-11.
    \114\ Rule 15c2-11(a) (17 CFR 240.15c2-11(a)). The broker-dealer
must also have a reasonable basis for believing that the issuer
information, when considered along with any supplemental
information, is accurate and is from a reliable source.
    \115\ Rule 15c2-11(a)(4).
---------------------------------------------------------------------------

    We propose to amend Rule 15c2-11 to conform to the proposed rule
amendments so that a broker-dealer must have available the information
that, since the beginning of its last fiscal year, the issuer has
published in order to maintain the Rule 12g3-2(b) exemption. Because
some issuers currently still make paper submissions to maintain their
Rule 12g3-2(b) exemption, we expect that, during the first year of the
amended rules' effectiveness, a broker-dealer may have to resort to
both paper submissions and electronically published materials in order
to fulfill its Rule 15c2-11 obligations regarding a particular issuer.
Eventually, however, a broker-dealer will only have to look to an
issuer's electronically published materials for the purpose of Rule
15c2-11.
    The proposed amended Rule 15c2-11 would still require a broker-
dealer to make reasonably available upon request the information
published pursuant to Rule 12g3-2(b). However, a broker-dealer would be
able to satisfy this requirement by providing the requesting person
with appropriate instructions regarding how to obtain the information
electronically. This reflects our view that most investors will have
ready access to the electronically published documents of Rule 12g3-
2(b)-exempt issuers.
Comment Solicited
    We solicit comment on the proposed amendments to Rule 15c2-11.
     Should we require a broker-dealer to have available the
information published by an issuer to maintain the Rule 12g3-2(b)
exemption, as proposed?
     Should we continue to require a broker-dealer to make this
information reasonably available upon request, as proposed? Should a
broker-dealer be able to satisfy this requirement by providing
appropriate instructions regarding how to obtain the information
electronically, as intended?

L. Proposed Transition Periods

1. Regarding Section 12 Registration
    While we believe most issuers that currently have the Rule 12g3-
2(b) exemption will continue to be able to claim the exemption upon the
effectiveness of the proposed rule amendments, some may not be able to
do so because their U.S. trading volume exceeded 20 percent of their
worldwide trading volume on the last day of their most recently
completed fiscal year. Those issuers would have to file a Section 12
registration statement if they are unable to meet all of the amended
rule's conditions. In order to provide those issuers with sufficient
time to prepare for and complete the Section 12 registration process,
including obtaining required audited financial statements, we are
proposing to require that those issuers become Exchange Act registrants
no later than three years from the effective date of the proposed rule
amendments.\116\
---------------------------------------------------------------------------

    \116\ We adopted a similar three-year transition period to
enable those grandfathered Nasdaq-traded foreign companies that were
Rule 12g3-2(b)-exempt to register under Section 12(b) after Nasdaq
became an exchange. See  Release No. 34-54241 (July 31, 2006), 71 FR
45359 (August 8, 2006).
---------------------------------------------------------------------------

    We believe this proposed three-year transition period is necessary
for the benefit not just of issuers, but of broker-dealers and
investors as well. If a currently exempt issuer is unable to claim the
Rule 12g3-2(b) exemption upon the effectiveness of the proposed
amendments because it cannot satisfy the trading volume threshold, but
meets the amended rule's other conditions, it may continue to rely on
the exemption during the transition period as long as it complies with
the electronic publishing and other conditions, except for the trading
volume condition, required to maintain the exemption. Accordingly,
during this transition period, a broker-dealer would be able to rely on
that issuer's electronic postings to meet its Rule 15c2-11 obligations
to investors and to facilitate resales of that issuer's securities in
Rule 144A transactions.
Comment Solicited
    We solicit comment on the proposed three-year transition period.
     Should we adopt a three-year transition period for
currently-exempt issuers that cannot claim the Rule 12g3-2(b) exemption
on the effective date of the rule amendments, as proposed?
     Should we instead adopt a shorter transition period, such
as a one or two-year transition period? Should we adopt a longer
transition period, such as a four or five-year period? Should we not
adopt any transition period?
2. Regarding Processing of Paper Submissions
    Although the 2007 amendments permitted an issuer that received the
Rule 12g3-2(b) exemption upon application to the Commission to publish
electronically its non-U.S. disclosure documents required to maintain
the exemption, many issuers still submit those documents in paper. The
Commission continues to process those paper documents and make them
publicly available in the Public Reference Room at its Washington, DC
headquarters.
    We expect that, following the effectiveness of the proposed rule
amendments, some Rule 12g3-2(b)-exempt companies will continue to
submit their non-U.S. disclosure documents in paper to the Commission
either because they are unaware of the amendments or lack electronic
publishing capabilities. Because there may be some investors who
currently do not have ready access to the Internet, we are proposing to
continue to process paper Rule 12g3-2(b) submissions and make them
publicly available in the Public Reference Room for three months
following the effectiveness of the rule amendments. Thereafter, the
Commission will no longer process paper Rule 12g3-2(b) submissions. An
issuer that continues to make Rule 12g3-2(b) submissions in paper after

this three-month period, and does not publish the submitted documents
electronically as required, would no longer be able to claim the Rule
12g3-2(b) exemption.
    We anticipate that three months would be sufficient time for all
Rule 12g3-2(b)-exempt issuers to develop the capabilities to publish
electronically their non-U.S. disclosure documents. We further
anticipate that the proposed three-month transition period would be
sufficient to permit investors and other interested persons to
determine how and where to access those electronically published
documents.
Comment Solicited
    We solicit comment on the proposed three-month transition period
for the processing of paper Rule 12g3-2(b) submissions.
     Is a transition period necessary to provide issuers with
sufficient time to publish electronically their non-U.S. disclosure
documents required under Rule 12g3-2(b) or to enable investors to learn
how to access those electronically published documents?
     If so, would the three-month transition period be
sufficent? Should it be less than three months, such as one month, or
two months? Should it be longer than three months, such as six months
or one year?

M. Revisions to Form 15

    As part of the 2007 amendments, we revised Exchange Act Rules 12g-4
and 12h-3, the older exit rules, by eliminating foreign private issuer
provisions that were no longer needed because of the adoption of Rule
12h-6, and by renumbering the remaining provisions accordingly.\117\
However, we did not correspondingly revise the cover page of Form 15,
which requires an issuer to indicate under which provision of Rule 12g-
4 or 12h-3 it is terminating its Section 12(g) registration or
suspending its Section 15(d) reporting obligations. Because Form 15
refers to the pre-March 2007 version of Rules 12g-4 and 12h-3, it has
understandably engendered some confusion among issuers seeking to file
the form. We are today adopting revisions to the cover page of Form 15
to reflect the current version of Rules 12g-4 and 12h-3.\118\
---------------------------------------------------------------------------

    \117\ The March 2007 amendments eliminated Exchange Act Rules
12g-4(a)(2)(i) and (ii) (17 CFR 240.12g-4(a)(2)(i) and (ii)) and
Rules 12h-3(b)(2)(i) and (ii) (17 CFR 240.12h-3(b)(2)(i) and (ii)),
and renumbered Rule 12g-4(a)(1)(i) and (ii) as Rule 12g-4(a)(1) and
(2) (17 CFR 240.12g-4(a)(1) and (2)).
    \118\ As amended, Form 15's cover page refers to Exchange Act
Rule 12g-4(a)(1) or (2) and Rule 12h-3(b)(1)(i) or (ii), in addition
to Rule 15d-6 (17 CFR 240.15d-6), which remains unchanged. We are
adopting these revisions today without soliciting comment because
they involve solely a technical matter that does not give rise to
any substantive change in the Commission's rules.
---------------------------------------------------------------------------

General Request for Comments
    We solicit comment on the proposed amendments to Rule 12g3-2(b),
(c), (d), (e), and (f), Rule 15c-2(11), and Forms F-6, 40-F, 6-K, and
15F, as well as to all other aspects of the proposed 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 proposed rule amendments they deem essential, what
aspects they believe are preferred but not essential, and what aspects
they believe should be modified.

III. Paperwork Reduction Act Analysis

    This rule proposal contains ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995
(``PRA'').\119\ We are submitting our proposal to the Office of
Management and Budget (``OMB'') for review in accordance with the
PRA.\120\ The title of the affected collections of information are
submissions under Exchange Act Rule 12g3-2 (OMB Control No. 3235-0119)
and Securities Act Form F-6 (OMB Control No. 3235-0292). An agency may
not conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB
control number. Compliance with the proposed amendments to Rule 12g3-2
and Form F-6 will be mandatory.
---------------------------------------------------------------------------

    \119\ 44 U.S.C. 3501, et seq.
    \120\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

    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, on an ongoing basis,
either submits copies of its material non-U.S. disclosure documents to
the Commission in paper or publishes those documents on its Internet
Web site or through an electronic information delivery system in its
primary trading market. 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.
    Securities Act Form F-6 is the form used to register American
Depositary Receipts (``ADRs''), which are a special type of security
issued by a U.S. bank, representing a specified amount of securities
issued by a foreign company that are deposited with the bank. We
adopted Form F-6 in order to provide investors with information
concerning a foreign company's ADRs, as disclosed in the deposit
agreement, which must be attached as an exhibit to the Form F-6.
    The hours and costs associated with making submissions under
Exchange Act Rule 12g3-2(b) and preparing, filing and sending Form F-6
constitute reporting and cost burdens imposed by those collections of
information. We based our estimates of the effects that the proposed
rule amendments would have on those collections of information
primarily on our review of the most recently completed PRA submissions
for Rule 12g3-2(b) documents and Form F-6, on the particular
requirements for those submissions and form, and on other information,
for example, concerning relative U.S. trading volume for foreign
private issuers whose equity securities trade in the U.S. over-the-
counter market.
    The proposed amendments to Exchange Act Rule 12g3-2 would permit a
foreign private issuer to claim the Rule 12g3-2(b) exemption, without
having to submit paper copies of written materials to the Commission,
if, among other requirements, its U.S. average daily trading volume has
been no greater than 20 percent of its worldwide average trading volume
for its most recently completed fiscal year. The proposed amendments
would require a qualifying issuer to publish on an ongoing basis copies
of its non-U.S. disclosure documents required by Rule 12g3-2(b) on its
Internet Web site, or through an electronic information delivery system
in its primary trading market, instead of permitting their submission
in paper to the Commission.
    The proposed amendments of Form F-6 would require a registrant to
state that the issuer of the deposited securities, which is not an
Exchange Act reporting company, publishes information in English
required to maintain the Rule 12g3-2(b) exemption on the issuer's
Internet Web site or through its primary trading market's electronic
information delivery system. The proposed amendments would also require
the registrant to disclose the address of the issuer's Internet Web
site or electronic information delivery system. A registrant that
already has an effective Form F-6 would have to disclose the address of
where the issuer electronically publishes its non-U.S.

disclosure documents under Rule 12g3-2(b) when the registrant first
amends its Form F-6 following the effective date of the proposed rule
amendments.
    We have prepared the annual burden and cost estimates of the
proposed rule amendments on Rule 12g3-2(b) submissions or publications
and Form F-6 based on the following current estimates and assumptions:
     A foreign private issuer incurs 75% of the burden required
to produce each Rule 12g3-2(b) submission or publication, excluding the
initial application for the Rule 12g3-2(b) exemption and English
translation work, and 25% of the burden required to perform work for
the initial application and English translation for the Rule 12g3-2(b)
submissions or publications;
     Outside firms, including legal counsel, accountants and
other advisors satisfy 25% of the burden required to produce each Rule
12g3-2(b) submission or publication, not including the initial
application for the Rule 12g3-2(b) exemption and English translation
work, at an average cost of $400 per hour, 75% of the burden required
to produce the initial application at an average cost of $400 per hour,
and 75% of the burden resulting from English translation work at an
average cost of $125 per hour;
     English translation work constitutes on average 25% of the
total work required for the Rule 12g3-2(b) submissions;
     A registrant satisfies 25% of the burden required to
produce each Form F-6; and
     Outside firms, including legal counsel, accountants and
other advisors, satisfy 75% of the burden required to produce each Form
F-6 at an average cost of $400 per hour.

A. Rule 12g3-2(b) Submissions or Publications