on other grounds, WHX Corp. v. SEC, 362 F.3d 854 (D.C. Cir. 2004).
    \311\ If the tender offer is for less than all of the securities
of the subject class and the offer is oversubscribed, the bidder
must purchase tendered securities on a pro rata basis. See Section
14(d)(6) of the Exchange Act and Exchange Act Rules 13e-4(f)(3) and
14d-8.
---------------------------------------------------------------------------

    The all-holders provisions in Rules 14d-10 and 13e-4(f) apply
equally to U.S. as well as non-U.S. target holders.\312\ However, we
are aware that certain bidders are purporting to exclude foreign target
security holders in tender offers subject to these rules. Therefore, we
wish to reiterate our position that the all-holders requirement does
not allow the exclusion of any foreign or U.S. target holder in tender
offers subject to those rules. We believe it is in the interests of
U.S. investors to enforce U.S. equal treatment principles for the
benefit of non-U.S. target security holders. This is particularly true
today, where comparable foreign all-holders requirements may protect
U.S. investors by preventing their exclusion from cross-border offers.
---------------------------------------------------------------------------

    \312\ See All-Holders and Best-Price Adopting Release, Section
III.A.2., which stated ``While a tender offer subject to Sections
13(e) and 14(d) of the Williams Act must be held open to all holders
of the subject class of securities, including foreign persons, Rules
14d-10(b)(1) and 13e-4(f)(9)(i) make clear that the all-holders
requirement does not affect the required dissemination of tender
offers. * * * The Commission has not interpreted these provisions as
requiring dissemination of tender offer materials outside of the
United States, and the adoption of the all-holders requirement is
not intended to impose any additional requirements in this regard.''
(emphasis added; footnotes omitted).
---------------------------------------------------------------------------

    We recognize, however, that the requirement to make an offer
available to all foreign target holders, particularly for registered
exchange offers, may present a burden for bidders that may need to
comply with both foreign and U.S. rules. We are soliciting comment on
whether any amendments to the U.S. equal treatment provisions are
necessary or advisable to allow certain target security holders to be
excluded from the offer. In this regard, we note the exception in Rule
14d-10(b), which states that the all-holders rule will not ``prohibit a
bidder from making a tender offer excluding all security holders in a
state where the bidder is prohibited from making the tender offer by
administrative or judicial action pursuant to a state statute after a
good faith effort by the bidder to comply with such statute.''\313\ We
are soliciting comment as to whether this rule should be amended to
include a similar provision with respect to target holders in foreign
jurisdictions. We are also soliciting comment as to whether we should
specifically define what a ``good faith effort'' means.
---------------------------------------------------------------------------

    \313\ Exchange Act Rule 13e-4(e)(9) contains a comparable
provision for issuer tender offers.
---------------------------------------------------------------------------

    Notwithstanding the requirements of Rule 14d-10 and Rule 13e-4(f)
to extend an offer to all holders of a target company's securities,
these provisions have not been interpreted to require that offering
materials be mailed into foreign jurisdictions.\314\ We recognize that
disseminating a U.S. offer document in non-U.S. jurisdictions may
implicate applicable foreign laws. Certain foreign jurisdictions allow
bidders not to mail offer materials into certain foreign jurisdictions.
For instance, the U.K. Takeover Panel has adopted a ``de minimis''
exception permitting bidders not to mail offer materials to target
holders in jurisdictions where few target securities are held. Under
that rule, bidders for U.K. target companies may choose not to mail
offer materials to target security holders outside the U.K. and outside
the European Economic Area (the ``EEA'') when a particular jurisdiction
presents significant risks of civil, regulatory or criminal liability
to the bidder and less than three percent of the securities of the
target are held of record in that jurisdiction.\315\ We note that even
when the U.K. Code does not require the dissemination of offer
materials into a particular foreign jurisdiction pursuant to this
provision, it does not sanction a prohibition on tenders from security
holders located there.
---------------------------------------------------------------------------

    \314\ See footnote 312 above.
    \315\ The City Code on Takeovers and Mergers, Rule 30.3. The
note to Rule 30.3 provides an exception to the UK's dissemination
requirement with respect to shareholders outside of the EEA. The
note states:
    Where local laws or regulations of a particular non-EEA
jurisdiction may result in a significant risk of civil, regulatory
or, particularly, criminal exposure for the offeror or the offeree
company if the information or documentation is sent or made
available to shareholders in that jurisdiction without any
amendment, and unless they can avoid such exposure by making minor
amendments to the information being provided or documents being sent
or made available either:
    (a) The offeror or the offeree company need not provide such
information or send or make such information or documents available
to registered shareholders of the offeree company who are located in
that jurisdiction if less than 3% of the shares of the offeree
company are held by registered shareholders located there at the
date on which the information is to be provided or the information
or documents are to be sent or made available * * *; or
    (b) In all other cases, the Panel may grant a dispensation where
it would be proportionate in the circumstances to do so having
regard, notably, to the cost involved, any resulting delay to the
transaction timetable, the number of registered shareholders in the
relevant jurisdiction, the number of shares involved and any other
factors invoked by the offeror or the offeree company.
---------------------------------------------------------------------------

    We further note that certain bidders have required target holders
to certify that tendering their securities complies with local laws or
that an exemption applies that allows such tenders without further
action by the bidder to register or qualify its offer. We do not
believe it is appropriate to shift this burden of assuring compliance
with the relevant jurisdiction's laws to target security holders
because target security holders may not be in possession of relevant
facts regarding the bidder's action and the provisions of local law in
their home

jurisdiction necessary to make this determination.
Request for Comment
     Is it necessary or appropriate for bidders in tender
offers for U.S. target companies to exclude foreign target security
holders in certain non-U.S. jurisdictions? Why? Is the answer different
for cash tender offers versus exchange offers?
     Should bidders be allowed to condition tendering into an
offer on the subject security holder certifying to compliance with the
securities law requirements of its jurisdiction?
     Would permitting exclusion of some foreign target holders
result in decreased protections for U.S. holders in cross-border tender
offers?
     Should Rule 14d-10 and Rule 13e-4 be amended to include a
provision expressly stating that those rules will not prohibit a bidder
from excluding shareholders in a particular foreign jurisdiction, where
the bidder is prohibited from making the tender offer by foreign law
after a good faith effort by the bidder to comply with the law?
     [cir] What should be considered a ``good faith effort'' for
purposes of such a rule change?
     [cir] Should the number or percentage of security holders in a
particular jurisdiction or the cost or additional timing requirements
of complying with a particular jurisdiction's rules impact the good
faith determination?
     Should our rules be revised to permit exclusion of foreign
target security holders in any jurisdiction where a minimal number of
target holders are located? If so, what would be an appropriate de
minimis threshold? Three percent? Five percent?
     [cir] If the rules should be amended as described, should such a
provision be expanded to specifically include situations where a bidder
is unable to determine the beneficial ownership of the securities in a
foreign jurisdiction?
     [cir] If we were to adopt a de minimis exclusion, should we permit
exclusion only where the bidder also establishes a significant risk of
civil or criminal liability by extending the offer into that
jurisdiction?
     Should we require dissemination of offering materials to
all holders of a target's securities, whether or not they are located
in the United States? If we adopted such a requirement, should there be
exceptions? If so, what should they be?
2. Ability of Bidders To Exclude U.S. Target Security Holders
    As discussed above, one of the primary motivations of the
Commission in adopting the cross-border exemptions was to facilitate
the inclusion of U.S. security holders in cross-border business
combination transactions. We believe those exemptions have been
successful generally in encouraging offerors in cross-border business
combination transactions to include U.S. security holders in those
transactions. At the request of commenters, the Cross-Border Adopting
Release also provided guidance on whether and under what circumstances
offer materials for offshore tender and exchange offers may be posted
on the Internet without triggering U.S. tender offer and registration
rules.\316\ This followed earlier Commission guidance on the use of
Internet Web sites to solicit securities transactions and to offer
securities.\317\ The issue of using Internet Web sites in offshore
tender and exchange offers is part of a broader question as to whether
and how bidders in cross-border business combination transactions
legitimately may avoid the application of U.S. registration and tender
offer rules. Based on our experience with these matters since 1999, we
believe it may be helpful to provide additional guidance on issues
specific to cross-border tender offers.
---------------------------------------------------------------------------

    \316\ See Cross-Border Adopting Release, Section II.G.
    \317\ See Statement of the Commission regarding use of Internet
Web sites to offer securities, solicit securities transactions or
advertise investment securities offshore, Release No. 33-7516 (March
23, 1998) [63 FR 14806] (``1998 Internet Release'').
---------------------------------------------------------------------------

    Whether U.S tender offer rules apply in the context of a cross-
border tender offer depends on whether the bidder triggers U.S.
jurisdictional means in making a tender offer.\318\ Today foreign
jurisdictions commonly require information about a tender offer or
business combination transaction to be posted on a publicly-available
and unrestricted Web site.\319\ In addition, it is common for both
bidders and target companies in business combination transactions to
post information about the transactions on their own Internet Web
sites, whether or not they are required by the law of the foreign home
jurisdiction to do so.
---------------------------------------------------------------------------

    \318\ Section 14(d)(1) of the Exchange Act reads in relevant
part: ``It shall be unlawful for any person, directly or indirectly,
by use of the mails or by any means or instrumentality of interstate
commerce or of any facility of a national securities exchange or
otherwise, to make a tender offer for, or a request or invitation
for tenders of, any class of any equity security which is registered
pursuant to section 12 of this title * * * if, after consummation
thereof, such person would, directly or indirectly, be the
beneficial owner of more than 5 per centum of such class, unless at
the time copies of the offer or request or invitation are first
published or sent or given to security holders such person has filed
with the Commission a statement containing such information as the
Commission may by rules or regulations prescribe. * * *.''
    \319\ See, e.g., ProSiebenSat.1 Media AG (September 12,
2005)(describing the procedure in Germany of posting the offer
documents on an Internet web site). Such foreign provisions may
include a requirement to post the offer documents themselves, or
notice of the offer with instructions on how to obtain the offer
materials.
---------------------------------------------------------------------------

    As discussed above, the Commission has provided guidance on
measures acquirors may take to avoid triggering U.S. jurisdictional
means.\320\ We have recognized that bidders who are not U.S. persons
\321\ may structure a tender offer to avoid the use of the means or
instrumentalities of interstate commerce or any facility of a national
securities exchange in making its offer and, thus avoid triggering
application of our rules.\322\ A bidder making a tender offer for
target securities of a foreign private issuer may exclude U.S. target
security holders if the offer is conducted outside the United States
and U.S. jurisdictional means are not implicated.\323\ However, a
bidder may implicate U.S. jurisdictional means if it fails to take
adequate measures to prevent tenders by U.S. target holders while
purporting to exclude them. While we encourage bidders to allow U.S.
target security holders to participate in cross-border tender offers,
when a bidder permits them to participate in a tender offer, it must
follow U.S. rules unless an exemption applies. The relevant question
thus becomes how bidders may conduct exclusionary offers that are
limited to non-U.S. holders \324\ without implicating U.S. tender offer
rules, particularly where those offers are subject to the equal
treatment principles in Section 13(e) or 14(d) of the Exchange
Act.\325\
---------------------------------------------------------------------------

    \320\ See generally, the 1998 Internet Release and the Cross-
Border Adopting Release.
    \321\ In our view, it generally is inappropriate for a U.S.
bidder to exclude U.S. target security holders when making a tender
offer for a foreign private issuer target company. We continue to
believe that, in light of the cross-border exemptions adopted in
1999, a U.S. bidder generally would not have reason to exclude U.S.
target security holders in making an offer for the securities of a
foreign private issuer. See Cross-Border Adopting Release, Section
II.G.4. The rule revisions proposed today, if adopted, would
reinforce this view.
    \322\ See All-Holders and Best Price Adopting Release, Section
III.A.3. (finding that amendments to the all-holders and best price
provisions specifically exempting offshore exclusionary offers from
those provisions were unnecessary, given the application of the
jurisdictional means test).
    \323\ See footnote 319 above.
    \324\ We use the term ``exclusionary offer'' to mean tender
offers that exclude U.S. target holders of the subject class of
securities for which the offer is made.
    \325\ For tender offers not subject to Sections 13(e) or 14(d)
of the Exchange Act, such as third-party offers for a target class
of securities that is not registered under Section 12 of the
Exchange Act, no all-holders requirement exists. Therefore, U.S.
target security holders technically may be excluded from those
offers even where the U.S. jurisdictional means are triggered;
however, these offers would need to comply with the procedural and
anti-fraud requirements of applicable U.S. rules.

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

    The Commission has recognized, and we reaffirm today, that business
combination transactions present special considerations not common to
capital-raising issuances.\326\ Because of their pre-existing
investment in a target company, target security holders, including U.S.
holders, are likely to seek out any information about the target
company, the acquiror, and the proposed transaction.\327\ U.S. security
holders also may have a greater incentive and opportunity to find a
means to participate in transactions involving the target securities
they own. Even where they are not able to do so, U.S. holders' interest
in those securities may be affected significantly by a business
combination transaction involving the target company.\328\
---------------------------------------------------------------------------

    \326\ See Cross-Border Adopting Release, Section II.G.2.
    \327\ This is particularly true today, where advances in
technology permit investors to establish online alert systems to
inform them of any news relating to a target company.
    \328\ This is particularly the case in cross-border tender
offers, where bidders' ability to ``squeeze out'' target security
holders remaining after a tender offer may be more limited than in
the United States. For example, in some countries, bidders must
achieve ownership levels significantly in excess of 51 percent of
target securities to be able to compulsorily acquire the remaining
target securities. Where target securities are delisted after the
tender offer, U.S. holders excluded from the offer may be left with
an illiquid security.
---------------------------------------------------------------------------

    For these reasons, bidders seeking to avoid the application of U.S.
law should take special precautions to assure that their offer is not
made in the United States. We have provided guidance on how they may do
so in the context of cross-border tender offers.\329\ Perhaps the most
basic measure is to include legends on the offer materials themselves
and on any Internet Web site on which they are posted, indicating that
the offer is not being made in the United States.\330\ In addition, the
bidder should take special precautions to assure that tenders are not
accepted from nor sales of bidder securities made (in the case of
exchange offers) to target security holders resident in the United
States.\331\ These may include, in responding to inquiries and
processing letters of transmittal, obtaining adequate information to
determine whether the target security holder is a U.S. investor.\332\
In addition, the bidder could require representations by the tendering
security holder, or anyone tendering on that person's behalf, that the
tendering holder is not a U.S. holder or someone tendering on behalf of
a U.S. holder.\333\
---------------------------------------------------------------------------

    \329\ See Cross-Border Adopting Release, Section II.G.2.
    \330\ See 1998 Internet Release, Section III.B.
    \331\ See Cross-Border Adopting Release, Section II.G.2. We note
that business combinations other than tender offers, where the
target company is being merged out of existence, are different
because once such transactions are approved, all target holders'
securities will be acquired. In business combinations other than
tender offers, we have stated that we do not believe the acquiror
should avoid the payment of consideration to U.S. target holders.
Id.
    \332\ Id.
    \333\ Id.
---------------------------------------------------------------------------

    Several issues have come to light with respect to these measures to
keep a tender offer outside of the United States. First, we reiterate
that a legend or disclaimer stating that the offer is not being made
into the United States, or that the offer materials may not be
distributed there, is not likely to be sufficient in itself because, as
discussed in the preceding paragraph, if the bidder wants to support a
claim that the offer has no jurisdictional connection to the United
States, it also will need to take special precautions to prevent sales
to or tenders from U.S. target holders.\334\ In some cases, bidders
purporting to make exclusionary tender offers offshore have attempted
to circumvent foreign all-holders requirements by including statements
that the tender offer is not ``being made into the United States.'' We
do not view such statements as sufficient in themselves to avoid being
subject to the U.S. federal securities laws if, as a practical matter,
U.S. holders are not and may not be prevented from participating in the
offer using U.S. jurisdictional means.
---------------------------------------------------------------------------

    \334\ See Cross-Border Adopting Release, Section II.G.2.
---------------------------------------------------------------------------

    Bidders may require a representation or certification from
tendering holders that they are not U.S. holders to avoid triggering
U.S. law.\335\ We recognize the possibility that target security
holders could misrepresent their status in order to be permitted to
tender into an exclusionary offer. We have stated that where this
occurs, bidders will not be viewed as having targeted U.S. investors,
thereby invoking U.S. jurisdictional means.\336\ However, this position
is premised on the bidder having taken adequate measures reasonably
designed to guard against purchases from and sales to U.S.
holders.\337\ It is also premised on the absence of indicia that would
or should put the bidder on notice that the tendering holder is a U.S.
investor.\338\ Where tenders in exclusionary offers are made through
offshore nominees, bidders could require that these nominees certify
that tenders are not being made on behalf of U.S. holders. We recognize
that this may be problematic where the law of the applicable foreign
jurisdiction prevents the nominee from knowing the identity or location
of beneficial holders on whose behalf they hold.
---------------------------------------------------------------------------

    \335\ See Cross-Border Adopting Release, Section II.G.2.
    \336\ See 1998 Internet Release, Section III.C.
    \337\ Id.
    \338\ These would include receipt of payment drawn on a U.S.
bank, provision of a U.S. taxpayer identification number or
statements by the tendering holder that notwithstanding a foreign
address, the tendering holder is a U.S. investor. We have explicitly
noted that if, after implementing measures intended to safeguard
against tenders by U.S. persons, the bidder discovers it has
purchased securities from U.S holders, it should consider other
measures that may avoid this lapse in the future. Id.
---------------------------------------------------------------------------

    While we encourage the participation of U.S. target security
holders in cross-border tender offers and other business combination
transactions, their participation should be accomplished in compliance
with U.S. rules or through applicable cross-border exemptions. In the
future, the staff will more closely monitor exclusionary offers to
determine whether Commission action is necessary to protect U.S. target
holders.
Request for Comment
     Should the Commission provide additional guidance on the
specific measures an acquiror may or should take to avoid triggering
U.S. jurisdictional means in the context of cross-border business
combination transactions?
     What measures are reasonable and effective, and in the
best interests of U.S. investors?
     Should we also consider further rulemaking to address the
situation where a bidder seeks to avoid U.S. jurisdictional means by
excluding U.S. target security holders, but is subject to foreign home
country rules mandating that all target security holders must be
permitted to participate in the offer? How would such rules balance the
practical needs of bidders with the requirement to protect the
interests of U.S. investors?
3. Vendor Placements
    In many business combination transactions, the offer consideration
may include securities of the bidder. In some transactions, cash may be
offered together with the bidders' securities and, in other
transactions, no cash will be offered and the bidder's securities will
constitute the sole consideration offered to tendering holders of the
target's securities.
    For Tier I-eligible tender offers, for purposes of complying with
the equal

treatment requirement, bidders are permitted to offer cash
consideration to U.S. holders in lieu of offering securities so long as
the bidder has a reasonable basis for believing that the amount of cash
is substantially equivalent to the value of the consideration offered
to non-U.S. holders. In addition, most Tier I-eligible offers should be
eligible for the exemption from Securities Act registration provided by
Rule 802. If Rule 802 or another exemption from registration is not
available, then the bidder is required to register the securities being
offered under the Securities Act.
    In certain cross-border exchange offers, bidders may seek to avoid
the registration requirements under the Securities Act by establishing
a vendor placement arrangement for the benefit of U.S. target security
holders who tender into the offer. In a vendor placement, the bidder
generally employs a third party to sell in offshore transactions the
securities to which tendering U.S. security holders are entitled in the
offer. The bidder (or the third party) then remits the proceeds of the
resale (minus expenses) to those U.S. target security holders that
tendered into the offer.
    Where permissible, the vendor placement process allows bidders in
cross-border exchange offers to extend the offer into the United States
but avoid the Securities Act registration requirements. In effect, the
vendor placement is an effort to convert an exchange offer involving
the offer and sale of the bidder's securities (which would require
Securities Act registration) into an offer involving solely cash (which
does not require registration) as it relates to tendering U.S. security
holders.
    The staff often receives inquiries about the use of the vendor
placement structure in cross-border offers and has in the past issued
no-action letters permitting the use of the structure in limited
situations.\339\ Although tendering holders receive cash in a vendor
placement, the amount of cash received is largely dependent on the
market value of the underlying security. The protections of the
Securities Act are intended to give investors access to information
when making an investment decision with respect to the purchase of a
security. A vendor placement does not in all circumstances eliminate
the requirement for Securities Act registration, because tendering U.S.
holders may be effectively making an investment decision with respect
to the purchase of a security.
---------------------------------------------------------------------------

    \339\ See, e.g., Singapore Telecommunications Ltd (May 15,
2001); Oldcastle, Inc. (July 3, 1986); Electrocomponents PLC
(September 23, 1982), Equitable Life Mortgage and Realty Investors
(December 23, 1982); Getty Oil (Canadian Operations) Ltd. (May 19,
1983) and Hudson Bay Mining and Smelting Co., Ltd. (June 19, 1985).
---------------------------------------------------------------------------

    In the no-action letters issued by the staff, there are a number of
factors the staff looks to in deciding whether the vendor placement
arrangement obviates the need for Securities Act registration. These
factors include:
     The level of U.S. ownership in the target company;
     The amount of bidder securities to be issued overall in
the business combination as compared to the amount of bidder securities
outstanding before the offer;
     The amount of bidder securities to be issued to tendering
U.S. holders and subject to the vendor placement, as compared to the
amount of bidder securities outstanding before the offer;
     The liquidity and general trading market of the bidder's
securities;
     The likelihood that the vendor placement can be effected
within a very short time after the termination of the offer and the
bidder's acceptance of shares tendered in the offer;
     The likelihood that the bidder plans to disclose material
information around the time of the vendor placement sales; and
     The process used to effect the vendor placement sales.
    We believe these factors are relevant to whether registration is
required. In addition to the other factors listed above, offerors
should be particularly cognizant of U.S. target ownership levels.
    We believe that a vendor placement arrangement in cross-border
exchange offers would be subject to Securities Act registration unless
the market for the bidder securities to be issued in the exchange offer
and sold pursuant to the vendor placement procedure is highly liquid
and robust and the number of bidder securities to be issued in the
exchange offer and for the benefit of tendering U.S. holders is
relatively small compared to the total number of bidder securities
outstanding. We also would consider:
     The timeliness of the vendor placement process; that is,
whether sales of bidder securities through the vendor placement process
are effected within a few business days of the closing of the offer;
     Whether the bidder announces material information, such as
earnings results, forecasts or other financial or operating
information, before that process is complete; and
     Whether the vendor placement involves special selling
efforts by brokers or others acting on behalf of the bidder.
    In tender offers subject to Section 14(d) of the Exchange Act, the
all-holders and best price requirements in Rule 14d-10 also are
implicated by the use of the vendor placement structure because U.S.
target security holders would receive different consideration from
their non-U.S. counterparts. We generally believe that the parameters
of the Tier I cross-border exemptions should represent the appropriate
limits under which a bidder in a tender offer subject to Regulation 14D
may offer cash to U.S. security holders while issuing shares to their
counterparts outside the United States.
    Bidders making a cross-border exchange offer sometimes ask whether
they may exclude some U.S. target holders and include in the exchange
offer only those U.S. target holders (such as accredited investors) for
whom an exemption from the registration requirements of the Securities
Act may be available. We have stated that exchange offers for
securities subject to Section 14(d) of the Exchange Act may not be made
in the United States on a private offering basis, consistent with the
all-holders provisions of Rule 14d-10.\340\ Thus, even where the bidder
is eligible to rely on an exemption from Securities Act Section 5 for
such offers, it would violate the equal treatment provisions applicable
to such offers by excluding target security holders for whom an
exemption was not available. Similarly, as discussed above, offering
cash under a vendor placement arrangement to some U.S. holders and
bidder securities to others (such as institutions) is not permitted in
tender offers subject to the all-holders rule.
---------------------------------------------------------------------------

    \340\ See footnote 91 in the Cross-Border Adopting Release.
---------------------------------------------------------------------------

    Bidders may continue to use vendor placement arrangements in
accordance with the guidance set forth here. Where a bidder seeks to
use the vendor placement structure for a tender offer subject to Rule
14d-10 at U.S. ownership levels above Tier I, it must seek an exemption
from those rules. As noted above, such relief will be granted only
where it is in the interests of U.S. investors.

III. General Request for Comment

    We request and encourage any interested person to submit comments
on any aspect of our proposals or guidance and any of related matters
that might impact the proposed amendments or guidance. We request
comment from investors, issuers, and other users of the information
that may be affected by the

proposed rule changes and interpretive guidance. We also request
comment from service professionals, such as law and accounting firms.
With respect to any comments, we note that they are of greatest
assistance to our rulemaking initiatives if accompanied by supporting
data and analysis of the issues addressed in those comments.

IV. Paperwork Reduction Act

    Some provisions of the proposed rule amendments require the
``collection of information'' within the meaning of the Paperwork
Reduction Act of 1995 (the ``PRA'').\341\ We will submit our proposed
revisions to the Office of Management and Budget (``OMB'') for review
in accordance with the PRA.\342\ The titles for the collections of
information are:
---------------------------------------------------------------------------

    \341\ 44 U.S.C. 3501 et seq.
    \342\ 44 U.S.C. 3507(d); 5 CFR 1320.11.
---------------------------------------------------------------------------

    (1) ``Form S-4'' (OMB Control No. 3235-0065);
    (2) ``Form F-4'' (OMB Control No. 3235-0325);
    (3) ``Form ID'' (OMB Control No. 3235-0328);
    (4) ``Form CB'' (OMB Control No. 3235-0518);
    (5) ``Form F-X'' (OMB Control No. 3235-0379);
    (6) ``Schedule TO'' (OMB Control No. 3235-0515); and
    (7) ``Securities Ownership--Regulation 13D (Commission Rules 13d-1
through 13d-7 and Schedules 13D and 13G)'' (OMB Control No. 3235-0145).
    We adopted these existing forms and schedules pursuant to the
Securities Act and Exchange Act. Forms F-4 and S-4 contain disclosure
requirements for registration statements that are prepared by issuers
to provide investors information to make informed investment decisions
in registered offerings of securities. Form CB and Schedule TO provide
investors with information to make informed investment decisions
regarding certain business combination transactions and rights
offerings. Regulation 13D was adopted pursuant to the Exchange Act and
sets forth the disclosure requirements for securities ownership reports
filed by investors.
    The hours and costs associated with preparing and filing the
disclosure, filing the forms and schedules and retaining records
required by these regulations constitute reporting and cost burdens
imposed by each collection of information. 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.

A. Summary of Proposals

1. Proposed Amendments to the Tier I Exemption and Form CB
    The proposed rule amendments would add to the types of affiliated
transactions that could be effected in reliance on the Tier I exemption
from Rule 13e-3(g)(6). A Form CB would be required when an issuer or
acquiror relies on the expanded Tier I exemption proposed and publishes
or otherwise disseminates an informational document to holders of the
subject securities. Because more transactions would become eligible to
rely on the exemption from Rule 13e-3 for cross-border transactions,
this rule change may result in additional submissions of Form CB. If
the rule were not expanded, however, the issuer or affiliate would be
required to comply with the more burdensome filing requirements of
Schedule 13E-3 if the issuer or affiliate sought to include U.S.
security holders in the transaction. We believe the proposed rule and
reduced filing requirement would encourage issuers or affiliates to
include U.S. security holders in transactions that otherwise may have
excluded them to avoid Rule 13e-3 and the corresponding Schedule 13E-3
filing requirements. Domestic or foreign entities or persons engaged in
cross-border business combination transactions would likely be the
respondents to the collection of information requirements.
    Unlike Schedule 13E-3, Form CB is a notice filing that is little
more than a cover sheet that incorporates offer documents sent to
security holders pursuant to applicable foreign rules in the issuer's
or target's home country. The party furnishing the form must attach an
English translation of the offer materials disseminated abroad. Form CB
must be submitted by the next U.S. business day after that document is
disseminated under home country rules.
    We propose to require all Form CBs to be filed electronically.
Under existing rules, only persons who are already subject to reporting
obligations under Section 13(a) or 15(d) of the Exchange Act are
required to submit Form CB electronically and all others may submit the
form in paper. We also propose to require that Form F-Xs filed in
connection with Form CBs to be filed electronically. We do not expect
these amendments to affect the overall collection of information burden
of these forms.
    Form ID is filed by registrants, individuals, transfer agents,
third-party filers or their agents to request the assignment of access
codes that permit the filing of securities documents on EDGAR. This
form enables the Commission to assign an identification number (CIK),
confirmation code, password and password modification authorization
code to each EDGAR filer, each of which is designed to protect the
security of the EDGAR system. While we do not expect that the proposed
amendments will affect the overall collection of information burden of
Forms CB and F-X, we do expect that it will cause additional
respondents to file a Form ID each year and, as a result, will increase
the annual collection of information burden for that form. We estimate
that 65,700 respondents file Form ID each year at an estimated burden
of .15 hours per response, all of which is borne internally by the
respondent for a total annual burden of 9,855 hours. For fiscal year
2007, a total of 189 Form CBs were filed with the Commission. Of those
189 Form CBs, 100 were filed in paper. We expect the proposed
amendments will cause an additional 100 respondents to file a Form ID
each year and, as a result, cause an additional annual burden of 15
hours (100 x .15). For purposes of the PRA, we estimate that the
additional burden cost resulting from the proposed amendments will be
zero.
2. Proposed Amendments to Forms S-4, F-4, and Schedule TO
    We propose amendments to the cover page of Forms S-4 and F-4 and
Schedule TO that would require the filer to check a box specifying the
applicable cross-border exemption being relied upon in connection with
the transaction. Domestic and foreign persons or entities filing these
documents would be the respondents to the collection of information
requirement. This change would not affect the substantive obligation to
file the forms or schedule. This additional information would allow the
staff to better process such filings and monitor the application of the
cross-border exemptions. For our proposal regarding Schedule TO and
Forms S-4 and F-4, the amount of information required to be included in
each schedule or form would change minimally with the addition of a
check box. Accordingly, for purposes of the PRA, our preliminary
estimate is that the amount of time necessary to prepare each schedule
or form, and hence, the total amount of burden hours, would not change.

3. Proposed Amendments to Schedule 13G
    Exchange Act Schedule 13G is a short-form filing for persons to
report ownership of more than five percent of a class of equity
securities registered under Section 12 of the Exchange Act. Generally,
the filer must certify that the securities have not been acquired and
are not held for the purpose of, or with the effect of, changing or
influencing the control of the issuer of the securities. For purposes
of the PRA, we currently estimate that compliance with the Schedule 13G
requirements under Regulation 13D requires 98,800 burden hours in
aggregate each year, broken down into 24,700 hours (or 2.6 hours per
respondent) of respondent personnel time and costs of $22,230,000 (or
$2,340 per respondent) for the services of outside professionals.\343\
---------------------------------------------------------------------------

    \343\ These figures assume 9,500 respondents file Schedule 13G
with the Commission annually. We estimate that 25 percent of the
burden of preparation is carried by the company internally and that
75 percent of the burden of preparation is carried by outside
professionals retained by the issuer. These figures assume an
average cost of $300 per hour for the services of outside
professionals. We have increased the cost estimate to $400 since our
last estimate provided to OMB, based on our consultations with
several registrants and law firms and other persons who regularly
assist registrants in preparing and filing with the Commission.
Therefore, the revised cost for the service of outside professionals
would be $29,640,000 ($400 x 74,100 hours) or $3,120 per respondent.
---------------------------------------------------------------------------

    The proposed amendment to Rule 13d-1 would expand the availability
of Schedule 13G to foreign institutions governed by a regulatory system
substantially comparable to the U.S. regulatory system for domestic
institutions. We propose to allow specified foreign institutions to
report beneficial ownership of more than five percent of a subject
class of securities on Schedule 13G instead of Schedule 13D. Foreign
institutions of the type specified in amended Rule 13d-1(b) would be
the likely respondents to the collection of information requirements.
These institutions either currently would be filing on Schedule 13D as
required by existing rules, or would be required to seek no-action
letters from the staff to permit them to file on Schedule 13G to the
same extent as their domestic counterparts, so long as they satisfy
certain conditions. Amending the rule would enable foreign institutions
meeting the conditions in the rule to file the Schedule 13G without
seeking a no-action letter. Therefore, the amended rule may result in
only a slight increase in the number of Schedule 13G filers.\344\
---------------------------------------------------------------------------

    \344\ Based on the number of no-action requests in this area in
recent years, we believe that approximately three filers per year
would benefit from this proposed change and would avoid the time and
expense of submitting a no-action request to the staff. In addition,
foreign institutions currently filing on Schedule 13D who have not
sought no-action relief to file on Schedule 13G would also benefit
by becoming eligible to use the shorter Schedule 13G. See discussion
above.
---------------------------------------------------------------------------

    For purposes of the PRA, we estimate that the proposed amendments
to Schedule 13G would create an incremental burden of two hours per
response, which we would add to the existing Schedule 13G burden
resulting in a total burden of 117,800 hours.\345\ We note that the
burden associated with the proposed amendments to Schedule 13G
initially would be higher with an estimated burden of five hours. Over
time, however, we believe that on average the burden would lessen and
therefore estimate an incremental burden of two hours per response.
Each additional filer would incur a burden of approximately .50 hours
of respondent personnel time (25 percent of the total burden) and costs
of $450 for the services of outside professionals (75 percent of the
total burden). In sum, we estimate that the amendments to Schedule 13G
would increase the annual paperwork burden by approximately 1.50 hours
of respondent personnel time \346\ and a cost of approximately $1,350
for the services of outside professionals.\347\
---------------------------------------------------------------------------

    \345\ We currently estimate the burden for preparing a Schedule
13G filing to be 10.4 hours, resulting in a total of 98,800 burden
hours in aggregate each year. If each additional filer incurred an
additional two hours, the resulting burden would be 117,800 total
burden hours ((10.4 hours + two hours) x 9500 respondents).
    \346\ Three additional filers x .50 hours of respondent
personnel time = 1.50 aggregate burden hours.
    \347\ Three additional filers x $450 = $1,350.
---------------------------------------------------------------------------

    We estimate that Schedule 13D has a total burden of approximately
14.5 hours per response to prepare and is filed by 3,000 respondents
annually. For purposes of the PRA, we currently estimate that
compliance with the Schedule 13D requirements under Regulation 13D
requires 43,500 burden hours in aggregate each year, broken down into
10,875 hours (or 3.6 hours per respondent) of respondent personnel time
and costs of $9,787,500 (or $3,263 per respondent) for the services of
outside professionals.\348\
---------------------------------------------------------------------------

    \348\ As noted above, we have increased the cost estimate to
$400 since our last estimate provided to OMB, based on our
consultations with several registrants and law firms and other
persons who regularly assist registrants in preparing and filing
with the Commission. Therefore, the revised cost for the service of
outside professionals would be $13,050,000 ($400 x 10,875 hours) or
$4,350 per respondent.
---------------------------------------------------------------------------

    Based upon these estimates, a foreign institution currently filing
a Schedule 13D that would be eligible to file a Schedule 13G pursuant
to the proposed rule would benefit from a cost reduction of $473 per
respondent.\349\ As noted above, however, for a number of years, the
staff has provided no-action relief to foreign institutions seeking to
file a Schedule 13G rather than a Schedule 13D. For those institutions
that are already filing a Schedule 13G pursuant to no-action relief,
the proposed rules should only increase the cost associated with
providing the required certification in Schedule 13G and will not
significantly impact the cost of complying with the requirements of
Regulation 13D.
---------------------------------------------------------------------------

    \349\ We calculate this figure in the following manner: $3,263-
($2,340 + $450) = $473. The total cost burden of Schedule 13G is
estimated currently at an aggregate burden of $22,230,000, or $2,340
per respondent ($22,230,000/9,500 respondents = $2,340).
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B. Solicitation of Comments

    We request comment on the accuracy of our estimates. Pursuant to 44
U.S.C. 3506(c)(2)(B), the Commission solicits comments to: (i) Evaluate
whether the proposed collection of information is necessary for the
proper performance of the functions of the agency, including whether
the information would have practical utility; (ii) evaluate the
accuracy of the Commission's estimate of burden of the proposed
collection of information; (iii) determine whether there are ways to
enhance the quality, utility, and clarity of the information to be
collected; and (iv) evaluate whether there are ways to minimize the
burden of the collection of information on those who are to respond,
including through the use of automated collection techniques or other
forms of information technology.
    Persons submitting comments on the collection of information
requirements should direct the comments to the Office of Management and
Budget, Attention: Desk Officer for the Securities and Exchange
Commission, Office of Information and Regulatory Affairs, Washington,
DC 20503, and should send a copy to Nancy M. Morris, Secretary,
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090, with reference to File No. S7-10-08. Requests for materials
submitted to OMB by the Commission with regard to these collections of
information should be in writing, refer to File No. S7-10-08, and be
submitted to the Securities and Exchange Commission, Office of the
Secretary--Records Management Branch, 100 F Street, NE., Office of
Filings and Information Services, Washington, DC 20549. OMB is required
to make a decision concerning the collection of information between 30

and 60 days after publication of this release. Consequently, a comment
to OMB is assured of having its full effect if OMB receives it within
30 days of publication.

V. Cost-Benefit Analysis

    We are proposing amendments to our rules that would reduce the
overall cost for issuers and acquirors engaged in cross-border business
combination transactions. We also provide interpretive guidance
regarding the application of certain rules. Under current rules, where
there are conflicts between U.S. and foreign law or practice, acquirors
in cross-border business combination transactions frequently seek no-
action or exemptive letters from the staff. Under the proposed rule
amendments, much of the relief sought in the past would be available
without the need for no-action or exemptive letters. As a result, the
benefits of the rule amendments would include an increase in regulatory
certainty about the U.S. rules governing cross-border business
combination transactions and a substantial savings in the cost of
preparing letters requesting no-action or exemptive relief. Decreasing
the burden on acquirors of complying with U.S. rules governing business
combination transactions is designed to encourage them to extend more
transactions to U.S. target holders; therefore, we believe the proposed
rule revisions would be in the interests of U.S. investors while
continuing to provide appropriate protections. In order to more fully
characterize these benefits, we seek comments on the average cost of
preparing such letters and the amount of time spent working through
concerns raised during the staff's review of such letters. We also
solicit comments on any incremental costs of undertaking cross-border
transactions that might arise from the proposed rule amendments. We
request any relevant data from commenters that would help us quantify
these costs and related benefits.
    In analyzing the costs and benefits of the proposed rules, we
compare estimated future cross-border transaction activity that would
likely occur under the proposed rules with what would occur in a
benchmark case without the rules. Because the proposed rules would
assure parties of their ability to engage in practices that are
permitted now only through the request and issuance of a no-action or
exemptive letter, the benchmark case is the level of transaction
activity that would occur if parties did not have access to such
regulatory relief.

 A. Proposed Changes to the Eligibility Test for Determining
Eligibility To Rely on the Cross-Border Exemptions

1. Proposed Changes
    The changes we propose to the test for determining eligibility to
rely on the cross-border exemptions for business combination
transactions are limited in nature and scope and do not represent a
significant departure from our current rules. They are intended to
address specific problems acquirors have faced in determining whether
they can rely on the cross-border exemptions. These changes are not
intended to expand or reduce the number of parties eligible to use the
cross-border exemptions. The changes will not materially affect the
cost of undertaking such transactions relative to what would occur if
parties could not reliably obtain no-action or exemptive letters, as
currently is the case.
    We propose to allow acquirors to calculate the required U.S.
beneficial ownership figure within a range of dates that is no more
than 60 days before a specified reference date. Currently, our rules
require the calculation to be done as of a set date. We also propose to
change the reference date for purposes of the required calculation for
business combination transactions. Under current rules, the calculation
was required to be done as of the 30th day before commencement of a
cross-border business combination transaction. As proposed, we would
require the calculation to be done no more than 60 days before the
public announcement of the cross-border business combination
transaction. We also propose limited changes to the manner in which
U.S. ownership may be calculated for cross-border tender offers
accomplished on a non-negotiated or hostile basis. These changes are
intended to clarify certain elements of the ``hostile presumption''
test for these kinds of offers that have created uncertainty for
acquirors in the past. As discussed above, the reference date for the
negotiated transaction and hostile presumption tests for business
combination transactions also would be changed to key off of the public
announcement of the transaction. Finally, in this release and the
proposed rules, we provide some guidance on the ``reason to know''
element of the hostile presumption test, which we hope would make the
application of the test simpler and more certain for acquirors.
2. Benefits
    We anticipate that the enhanced flexibility to choose a date within
a range may make it easier for acquirors to accomplish the required
calculation as specified under our rules, thereby promoting use of the
exemptions and the inclusion of U.S. holders while reducing the
acquirors' burden of seeking no-action or exemptive letters in this
area. Changing the reference point for the calculation of U.S.
ownership to the public announcement of the transaction would mean that
the calculation would be done as of a date when the target's security
holder base may be unaffected (or less affected, if there are some
changes in response to rumors in the market) by the announcement of the
transaction, which would provide a more accurate picture of the
security holder base. This change also would allow acquirors more
flexibility in planning cross-border business combination transactions
and therefore, we expect bidders would be encouraged to engage in these
transactions. It is unclear whether using public announcement as the
reference point for the calculation would have the effect of increasing
or reducing U.S. ownership in the target company.
3. Costs
    Under the proposed amendments, U.S. investors may lose certain
protections under the U.S. rules governing cross-border business
combination transactions if the foreign private issuer in which they
own securities becomes the subject of such a transaction and the
acquiror relies on the cross-border exemptions. To the extent that the
applicable cross-border exemptions would exempt the acquiror from
compliance with U.S. registration, filing and disclosure requirements,
U.S. investors would lose these protections. In such circumstances,
however, we believe that the benefit to U.S. investors of being
included in the transaction rather than being excluded justifies the
cost of reduced protections under U.S. law. Otherwise, we do not
believe that U.S. investors would be harmed by the proposed flexibility
in calculation of U.S. ownership.

 B. Changes to the Tier I Cross-Border Exemptions

1. Expansion of the Tier I Exemption From Rule 13e-3
    We propose to expand the set of cross-border business combination
transactions that are exempt from the requirements of Rule 13e-3.
Currently, the cross-border exemption from Rule 13e-3 applies only to
tender or exchange offers or business combinations conducted under Tier
I.\350\

 We propose to expand the exemption to encompass any kind of affiliated
transaction that otherwise meets the conditions of the Tier I
exemption, including schemes of arrangement, cash mergers, compulsory
acquisitions for cash, and other types of transactions.
---------------------------------------------------------------------------

    \350\ As noted previously, the Tier I exemption is available
when U.S. holders beneficially own no more than ten percent of the
foreign private issuer target's securities.
---------------------------------------------------------------------------

a. Benefits
    The expansion of the Tier I exemption from Rule 13e-3 would likely
result in fewer filings of Schedule 13E-3, thus reducing the costs for
issuers and affiliates in cross-border transactions that would
otherwise be subject to those rules. Under the current rules, the
burden of complying with Rule 13e-3 and Schedule 13E-3 may be greater
for foreign filers than domestic filers. Foreign filers may not have a
counterpart to these rule provisions in their home jurisdiction and may
not be subject to the same fiduciary duty standards that form the basis
for this heightened disclosure system for affiliated transactions.
    Currently, some entities engaged in affiliated cross-border
business combination transactions that would have been subject to Rule
13e-3 under our current rules and cross-border exemptions request
individual exemptive relief from the staff. The staff has routinely
granted these requests. To the extent that these kinds of requests
would no longer be necessary, the rule change we propose today would
further reduce the costs for these entities. Issuers and affiliates may
have excluded U.S. holders from transactions where they would have been
required to file a Schedule 13E-3. We have been told that entities may
have avoided making an offer to U.S. holders to avoid application of
these rules, although it is difficult to isolate the effect of this
provision on the number of entities that chose not to include U.S.
holders. During 2007, approximately 110 Schedules 13E-3 were filed, 10
of which were filed by foreign private issuers. During that same
period, no requests for no-action relief on this issue were granted.
Therefore, we assume the overall effect would not be significant,
although we are not able to estimate the number of transactions that
may have been structured to avoid U.S. jurisdictional means, thereby
avoiding the requirement to file a Schedule 13E-3. We solicit comment
regarding the number of entities or persons that the rule amendment
would affect and the increases or decreases in cost that are likely to
result. We believe the rule amendment would result in a cost reduction
because it would lower the costs and burdens associated with extending
these kinds of transactions into the United States. This amendment
would be in the interests of U.S. investors to the extent that the
expanded exemption from Rule 13e-3 motivates an acquiror to include
U.S. investors in the transaction. Since the exemption applies only
where U.S. security holders make up no more than ten percent of the
subject security holder base, and because the heightened disclosure
requirements of Schedule 13E-3 may be onerous for foreign filers, we
believe this exemption may result in more cross-border transactions
being extended to U.S. investors.
b. Costs
    U.S investors of foreign private issuer targets in cross-border
business combination transactions that would have been subject to Rule
13e-3 but for our proposed rule amendment would lose the benefits of
the disclosure in Schedule 13E-3, to the extent that such disclosure is
not required under applicable foreign law.
    We seek data regarding the number of Schedules 13E-3 filed with
respect to the securities of foreign private issuers, the number of
entities or persons that the rule amendment would affect, and the
increases or decreases in cost that are likely to result, so we may be
able to estimate the costs and benefits associated with any possible
reduction of Schedule 13E-3 filings.
2. Technical Change to Rule 802 of Regulation C
    We also propose technical changes to the language of Rule 802.
These changes are not intended to substantively change the filing
obligations under the current rule, and we do not believe they would
have any impact on the way that rule currently functions, except to
clarify how it may be used. Therefore, the proposed changes would
likely confer no significant costs or benefits.

C. Proposed Changes to the Tier II Cross-Border Exemptions

    The rule changes we propose represent an expansion of the current
cross-border exemptions available to tender offers that meet the
conditions outlined in our rules. The Tier II exemptions--which exempt
certain tender offers for foreign target companies in which U.S.
persons beneficially own more than ten percent but not more than 40
percent of the target's subject securities--currently apply to tender
offers conducted by third parties, issuers or affiliates, where those
tender offers are subject to Rule 13e-4 or Regulation 14D. The rule
changes we propose would expand the relief provided in the Tier II
exemptions, and clarify that the Tier II exemptions also may be used
for cross-border tender offers subject only to Regulation 14E of the
Exchange Act. We also propose to expand Tier II relief for dual offers
by allowing offerors to make more than one concurrent non-U.S. offer,
and to allow certain U.S. offers to include non-U.S. persons and
certain foreign offers to include U.S. persons. Additionally, we
propose changes to Rule 14e-5 to codify recent exemptive relief for
Tier II-eligible tender offers.
1. Benefits
    These changes to the Tier II cross-border exemptions would expand
the relief provided for eligible cross-border tender offers.\351\ The
rule changes would reduce the need for bidders to seek individual no-
action or exemptive relief from the staff. Since they represent areas
in which relief is most frequently requested and granted for these
kinds of transactions, the changes would reduce the associated costs
and burdens of applying for relief. Where we already have reduced the
associated costs and burdens of requesting and granting relief through
Rule 14e-5 class exemptive letters, the codification of that relief in
rule text benefits market participants by modernizing the rule and
enhancing its utility by providing one readily-accessible location for
exempted activities. Because the proposed rule changes will make it
easier to make purchases outside of a U.S. tender offer in a manner
consistent with relief frequently granted by the staff in this area, we
believe the proposed changes also would have the effect of encouraging
acquirors and bidders to extend cross-border tender offers to U.S.
target holders on the same terms as all other target security holders.
---------------------------------------------------------------------------

    \351\ See the discussion above regarding the changes to the
threshold eligibility determination relating to the calculation of
U.S. ownership.
---------------------------------------------------------------------------

    To the extent that some of these proposed rule changes were not
contemplated in the 1999 Cross-Border Adopting Release and came about
only as a result of the staff's issuance of no-action and exemptive
letters, we analyze the benefits and costs of the proposed revisions
against the rules adopted in 1999 rather than against the perceived
state of the rules as created by the issuance of no-action relief. When
the Tier II exemption was adopted in 1999, by its terms it only applied
to tender offers subject to Rule 13e-4 or Regulation 14D. However, we
believe the benefits of the Tier II exemption

would apply equally to cross-border tender offers governed by
Regulation 14E only. By expanding the Tier II exemption to cover such
offers, the changes we propose would allow more acquirors to take
advantage of the exemption and thus allow more U.S. investors to
benefit from being included in the offer. Expanding the category of
offers for which Tier II relief is granted also would allow more
flexibility in structuring offers and encourage more acquirors to take
advantage of the exemption. Similarly, the proposed changes to the Tier
II relief for dual offers and the proposed changes to Rule 14e-5 are
intended to address certain foreign regulatory conflicts that were not
fully appreciated when the Tier II exemption was adopted in 1999. By
revising our rules to address these conflicts, we hope to enhance the
applicability of the Tier II exemption and the exemptions to Rule 14e-5
and therefore encourage more acquirors to take advantage of the
exemptions and include U.S. holders in cross-border transactions.
2. Costs
    As with transactions governed by Regulation 14D and Rule 13e-4, the
cost of reducing the protections of the Williams Act may include
reduced procedural and informational safeguards for U.S. investors;
however, the exemptions have been designed to reduce such a
possibility. We are not aware of any other cost that would be incurred
by expanding Tier II relief to tender offers governed by Regulation 14E
only. In addition, because these amendments would not change the filing
obligations of acquirors, investors would not lose the benefits of any
required disclosure. Neither the existing or proposed changes to Tier
II affect the registration requirements of Section 5 of the Securities
Act, which are not covered by these exemptions.
    The codification of Rule 14e-5 class exemptive letters into rule
text should not increase costs to market participants, as the substance
of the relief is not being altered. It is only a mechanism for the
relief that is being changed from class exemptive letters to propose
rule exemptions. While permitting purchases outside of a tender offer
might negatively impact U.S. investors by weakening the equal treatment
and proration protections of our rules, we believe that the conditions
imposed on the ability to purchase outside of a Tier II tender offer
under the proposed rules should help to safeguard the interests of U.S.
security holders. We solicit comment on any increases or reductions in
costs to security holders that may result from the proposals.

 D. Expanded Availability of Early Commencement

1. Proposed Change to Rule 162
    The rules we propose today would expand the ability to commence an
exchange offer before the registration statement filed with respect to
the securities offered is declared effective by the Commission. Our
current rules permit ``early commencement'' only where an exchange
offer is subject to Rule 13e-4 or Regulation 14D. For tender offers
conducted under Tier II, we propose to extend the option to all
exchange offers, so long as withdrawal rights are provided to the same
extent as would be required under Rule 13e-4 or Regulation 14D.
2. Benefits
    The proposed rule change would further harmonize the treatment of
exchange offers and cash tender offers. It would not impact the filing
and disclosure obligations of the acquiror under the Securities Act, or
the requirement to comply with the tender offer rules in Regulation
14E. Because foreign law may provide that a tender offer for one class
of securities will trigger an obligation to make a contemporaneous
offer for a related class, this rule change could enhance the ability
of such exchange offers to commence early, and therefore could enhance
the speed with which such offers may be effected. The proposed rule
change also could allow combined offers to compete with cash bids.
    The rule would provide the benefit to investors of receiving
withdrawal rights when they otherwise would not have been required
under U.S. rules. It also could cause offerors to extend an exchange
offer to U.S. target security holders, where concerns about delays
arising from the U.S. registration process might otherwise have caused
them to exclude U.S. investors.
3. Costs
    As discussed above, allowing an early commencement option for an
exchange offer may result in informational costs for target security
holders. Broadening the availability of early commencement may mean
that investors may be more likely to receive updates to the original
prospectus, to the extent that staff review results in material changes
to that document. In addition, this may present increased costs for
offerors who must recirculate in circumstances where they have elected
to commence their offer early, before the staff comment process (where
applicable) is complete.

E. Proposed Changes to Forms and Schedules

    In this release, we propose changes to the manner in which several
forms and schedules are filed. We propose that all Form CBs, and Form
F-Xs filed in connection with a Form CB, be required to be filed
electronically. Currently, Form CB must be filed electronically only
where the person furnishing it already is subject to Exchange Act
Sections 13(a) or 15(d) reporting requirements. A Form F-X filed in
connection with a Form CB must be filed electronically under the same
circumstances.
    In addition, we propose to add a box to the cover page of Schedule
TO and Forms S-4 and F-4 where the filing person would specify the
applicable cross-border exemption or exemptions being relied upon to
conduct the applicable transaction. The cover page of Form CB already
requires disclosure of this information. However, that form needs to be
filed only for some cross-border transactions, and only for those
conducted under Tier I or Rules 801 or 802. Under the rules proposed
today, filers relying on the Tier II cross-border exemptions and filing
a Schedule TO also would be required to indicate which, if any, cross-
border exemption they are relying on in conducting their tender offer.
    Similarly, filers of Form S-4 or F-4 that are conducting a cross-
border transaction under the Tier II exemptions would be required to
specify the cross-border exemption claimed on the cover page of those
forms. In some cases, they also would be filing a Schedule TO, where
the exchange offer is subject to Rule 13e-4 or Regulation 14D. However,
Form S-4 or F-4 may be filed before Schedule TO, where an exchange
offer commences early, and it would be helpful to have this information
at the earliest possible time in the offering process (see discussion
of benefits below). In other cases, where the subject class of
securities is not subject to Rule 13e-4 or Regulation 14D, but the
filer is relying on the Tier II exemptions under the expanded
availability we propose today, requiring this information on the cover
page of the Form S-4 or F-4 would be the only source of this
information. The changes we propose to Schedule TO and Forms S-4 and F-
4 would have no impact on the obligation of an offeror to file those
forms.
1. Benefits
    Requiring all Form CBs and related Form F-Xs to be filed via the

Commission's electronic data gathering and retrieval system, or EDGAR,
would make those forms more quickly and easily accessible to the
public, including U.S. investors. Instead of having to come in person
or through an agent to the Commission's public reference room to
conduct a search for these paper forms, investors would be able to
access them electronically through the Commission's Web site or through
any commercial service that links to EDGAR. Requiring Form CB to be
filed electronically also would enable the press and other market
participants to access these forms more easily and quickly, thereby
benefiting the market participants and investors by possibly making
information about the transaction more readily available.
    Filers should further benefit from increased efficiencies in the
filing process. Electronic filing avoids the delays and uncertainties
sometimes associated with manual delivery of paper filings. Not having
to submit multiple copies of paper documents to the Commission may
reduce burdens on filers, especially if they are located outside of the
United States. In addition, the longer filing hours for the direct
electronic submission of documents (until 10 p.m., Eastern Standard
Time or Eastern Daylight Saving Time, whichever is in effect) would
allow filers additional flexibility in meeting their obligation to
submit Form CB and Form F-X (where required) on the next business day
after the attached disclosure document is disseminated pursuant to home
country law.\352\
---------------------------------------------------------------------------

    \352\ Although filings are accepted until 10 p.m. Eastern
Standard Time or Eastern Daylight Savings Time, whichever is
currently in effect, Regulation S-T Item 13(a)(2) states that except
as otherwise provided in the rule, ``all filings submitted by direct
transmission commencing on or before 5:30 p.m. Eastern Standard Time
or Eastern Daylight Savings Time, whichever is currently in effect,
shall be deemed filed on the same business day, and all filings
submitted by direct transmission commencing after 5:30 p.m. Eastern
Standard Time or Eastern Daylight Savings Time, whichever is
currently in effect, shall be deemed filed as of the next business
day.'' Therefore, offerors or issuers would be able to submit
documents after Commission business hours on the day of
dissemination and have the filing date be the next business day.
---------------------------------------------------------------------------

    As to the information sought in Form S-4 or F-4 or Schedule TO, we
believe this information would serve an important function for purposes
of the staff review process and also would benefit filers. Currently,
the staff may not be aware when reviewing a registration statement or
tender offer statement that the filer is relying upon an applicable
cross-border exemption to modify the terms of its offer. Consequently,
the staff may not know whether non-compliance with all the rules that
would govern a particular transaction is a matter that the staff should
pursue through the comment process. Providing this information when the
Form S-4 or F-4 or Schedule TO is initially filed would eliminate the
need for the staff to issue, and the bidder to respond to, unnecessary
comments based on a lack of knowledge about reliance on a cross-border
exemption.
2. Costs
    There are costs associated with requiring all Forms CBs and related
Form F-Xs to be filed electronically. During the fiscal year ended
October 1, 2007, 45 initial Form CBs and 57 amendments were filed in
paper. Initial costs of electronic filing include those associated with
purchasing compatible computer equipment and software, including EDGAR
software if obtained from a third-party vendor and not from the
Commission's Web site. Initial costs also include training of existing
employees to make the required EDGAR filings, or engaging a third-party
to make them on the filer's behalf. Additional costs may be associated
with the formatting and transmission of a filer's document on EDGAR.
However, today financial printers and other information technology
specialists capable of electronic document processing for the EDGAR
system are widely available in the United States and abroad.
    In addition, there would be initial costs associated with filing a
Form ID in order to obtain the access codes needed to file a Form CB
and Form F-X electronically.\353\ To file Form ID, an offeror or issuer
must learn the related electronic filing requirements, obtain access to
a computer and the Internet, use the computer to access the
Commission's EDGAR Filer Management Web site, respond to Form ID's
information requirements and fax to the Commission a notarized
authenticating document. We expect that offerors or issuers would incur
few, if any, additional costs related to obtaining computer and
Internet access. We believe the vast majority of offerors and issuers
already would have access to a computer and the Internet.
---------------------------------------------------------------------------

    \353\ Offerors and issuers that already have EDGAR access codes
would not need to file a Form ID. We assume, however, that about 53
percent of Form CB filers do not or would not already have codes.
Assuming a cost of $175 per hour for in-house professional staff, we
estimate the current Form ID aggregate burden cost at $2,625 per
year ($175 per hour x 15 hours per year). The additional Form ID
burden cost resulting from the proposed amendments and the total
Form ID burden cost that will result from adding the estimated
additional Form ID burden cost to the estimated current Form ID
burden cost will be $1,727,250 (9,855 hours per year + 15 hours per
year = 9,870 hours per year); 9,870 hours per year x $175 per hour =
$1,727,250.
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    Since a Form CB and the accompanying Form F-X required for foreign
filers are not forms associated with periodic reporting on a regular
basis and are required only for certain specified kinds of
extraordinary transactions, we believe ongoing costs associated with
the proposed rule amendments may not be significant. We solicit
comments regarding the initial and ongoing costs that would be incurred
by filers submitting Form CB and related Form F-X electronically.
    We believe the costs associated with our proposed changes to
Schedule TO and Forms S-4 and F-4 would be minimal. As discussed above,
these changes would not impact the obligation to file the schedule or
form, nor would they change the substantive disclosure required. Filers
would already know whether, and if so, what cross-border exemption they
will rely upon in conducting their transaction. The proposed rule
change would require them only to specify that information for the
benefit of the staff and others viewing the filings.

F. Changes to the Beneficial Ownership Reporting Rules

    We propose to amend our rules to allow foreign institutions of the
same type as the domestic institutions listed in Rule 13d-1(b)(1)(ii)
to file on Schedule 13G instead of Schedule 13D. The proposed rule
would permit filing on Schedule 13G for certain specified types of
institutions, where they have acquired securities in the ordinary
course of their business and not with the purpose or effect of changing
or influencing control of the issuer of the subject securities. In
order to use Schedule 13G to the same extent as their U.S.
counterparts, these foreign ``qualified institutional'' filers also
would have to meet certain conditions currently set forth in the
staff's no-action letters. One such condition is the requirement to
certify that the regulatory scheme applicable to that type of
institution in its home country is comparable to the regulatory system
applicable to its U.S. counterpart. Another such condition is an
undertaking to provide to the Commission staff, upon request, the
information that would have been required under Schedule 13D.
 1. Benefits
    Currently, the staff commonly grants requests from foreign
institutions comparable to the types of institutions listed in Rule
13d-1(b) to file on Schedule 13G if they meet the

conditions outlined in the no-action letters. In the release adopting
amendments to the beneficial ownership rules in 1998, the Commission
discussed the fact that in the past, foreign institutional investors
requested exemptive and no-action letters.\354\ The Commission also
stated that foreign institutions that wanted to use Schedule 13G as a
qualified institutional investor should continue to request no-action
relief from the staff. Because the staff's issuance of no-action
letters was contemplated at the time of the 1998 amendments to the
beneficial ownership rules, we only consider the costs and benefits of
the proposed rule relevant to the staff's current practice of issuing
no-action letters. From this perspective, the proposed rule change
would eliminate the costs and burdens on foreign institutions of
seeking such relief individually. For foreign institutions that would
otherwise have been eligible to file on Schedule 13G as passive
investors under current rules, filing under Rule 13d-1(b) reduces the
burden on those filers because the initial filing obligation is less
onerous for qualified institutional filers. For example, qualified
institutions filing under Rule 13d-1(b) are required to file a Schedule
13G within 45 days after the end of the calendar year in which they own
over five percent of the subject class as of the last day of that year.
By contrast, passive investors reporting on Schedule 13G pursuant to
Rule 13d-1(c) must file their initial report within ten days of the
acquisition of more than five percent of the class. Unlike qualified
institutional filers, passive investors may not file on Schedule 13G
when their ownership equals or exceeds 20 percent of the subject class.
No such limit exists for qualified institutional filers.
---------------------------------------------------------------------------

    \354\ See Amendments to Beneficial Ownership Reporting
Requirements, Release No. 34-39538 (January 12, 1998) [63 FR 2854].
---------------------------------------------------------------------------

2. Costs
    Schedule 13D requires more extensive disclosure than Schedule 13G.
Therefore, to the extent that a filer taking advantage of the proposed
rule revisions otherwise would be required to file a Schedule 13D (or a
Schedule 13G as a passive investor), there may be some information cost
to U.S. investors by permitting the filer to use Schedule 13G. For
instance, Schedule 13D requires information about the purpose of the
beneficial owner's transaction in the securities, investment intent,
and sources of funding. To the extent that such information may be of
value to investors in making informed investment decisions, there would
be a cost in permitting these institutions to file on Schedule 13G. We
seek comment on the usefulness to investors of requiring these foreign
institutions to file on Schedule 13D.
    Foreign institutions wishing to take advantage of the proposed rule
change would incur certain costs to satisfy the conditions for filing
on Schedule 13G. In particular, foreign institutions would need to
assess whether their home country regulatory scheme is comparable to
the regulatory scheme applicable to their U.S. counterparts. This might
involve seeking the advice of home country or U.S. legal counsel.
However, we believe the incremental costs of complying with the
proposed rule would be minimal because foreign institutions are
commonly granted no-action relief to file on Schedule 13G under the
same circumstances as we propose to permit under the new rule.
Request for Comment
    We are sensitive to the costs and benefits imposed by our rules,
and have identified certain costs and benefits related to these
proposals. We request comment on all aspects of this cost-benefit
analysis, including identification of any additional costs and
benefits. We encourage commenters to identify and supply relevant data
concerning the costs and benefits of the proposed amendments.

VI. Consideration of Impact on Economy, Burden on Competition and
Promotion of Efficiency, Competition and Capital Formation

    Section 2(b) of the Securities Act \355\ and Section 3(f) of the
Exchange Act \356\ require us, when engaged in rulemaking that requires
us to consider or determine whether an action is necessary or
appropriate in the public interest, to consider whether the action will
promote efficiency, competition, and capital formation. When adopting
rules under the Exchange Act, Section 23(a)(2) of the Exchange Act
\357\ requires us to consider the impact that any new rule would have
on competition. In addition, Section 23(a)(2) prohibits us from
adopting any rule that would impose a burden on competition not
necessary or appropriate in furtherance of the purposes of the Exchange
Act. We request comment on whether the proposals, if adopted, would
promote efficiency, competition and capital formation or have an impact
or burden on competition. Commenters are requested to provide empirical
data and other factual support for their view, if possible.
---------------------------------------------------------------------------

    \355\ 15 U.S.C. 77b(b)
    \356\ 15 U.S.C. 78c(f).
    \357\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    The proposed changes to the test for determining eligibility to
rely on the Tier I and Tier II cross-border exemptions and Rule 802
under Regulation C are intended to facilitate the application of those
exemptions. When the exemptions were adopted in 1999, we determined
that the cross-border exemptions are important tools to promote the
inclusion of U.S. investors in transactions required to be conducted in
accordance with a foreign regulatory system. Streamlining and improving
the eligibility standards for the cross-border exemptions enhances
their utility by promoting their ease of use, thereby encouraging the
inclusion of U.S. investors in cross-border transactions.
    The purpose of the proposed amendment to Rule 13e-3(g)(6) is to
expand the exemption from Rule 13e-3 for cross-border transactions
meeting the conditions of Tier I. This proposed amendment should reduce
regulatory compliance burdens for issuers and affiliates engaged in
affiliated cross-border transactions that would otherwise be subject to
Rule 13e-3. The ability to avoid the application of Rule 13e-3 for
certain cross-border transactions is expected to benefit U.S.
investors, because an issuer or affiliate may choose to exclude them if
it is the only means to avoid the heightened disclosure burdens of Rule
13e-3.
    The purpose of the proposed changes to the Tier II tender offer
exemptions in Rules 13e-4(i), 14d-1(d) and 14e-5 is to expand those
exemptions to better address areas of recurring regulatory conflict. By
codifying relief previously granted by the staff for individual
transactions, the changes would reduce compliance burdens on issuers
and bidders who would no longer need to seek such relief for each
individual transaction. By enhancing the flexibility of U.S. tender
offer rules in cross-border transactions, where those rules conflict
with common elements of foreign law or practice, the changes would
increase the likelihood that bidders would include U.S. investors in
these transactions.
    We do not anticipate that the proposed changes to Rule 14e-5 will
have a significant impact, if any, on the economy because they simply
codify the current scope of activities exempted from that rule's
prohibitions through existing class exemptive letters. We believe that
the proposed changes to Rule 14e-5 should not place any burden on
competition as the proposed rule changes apply equally to all market

participants covered by the rule. We believe that the Rule 14e-5 class
exemptive letters concerning Tier II cross-border transactions have
promoted efficiency and capital formation by eliminating the time and
cost burdens associated with individual grants of relief. We believe
that the codification of those letters similarly should foster
efficiency and cross-border capital formation.
    The proposed amendment to Rule 162(a) expanding the ability of
offerors to commence an exchange offer early where a tender offer is
not subject to Regulation 14D or Rule 13e-4 would further equalize the
regulatory burden between cash tender offers and exchange offers.
Because foreign rules often contain a mandatory offer requirement,
obligating an offeror to make a tender offer for a given class of
securities, these rule changes would place mandatory offers for
unregistered classes of securities on an equal footing with offers for
registered equity securities.
    The proposed changes to require that Forms CB and F-X be filed
electronically on EDGAR could impose additional compliance costs on
filers. Since Form F-X is filed only by foreign companies, the proposed
change to that form would not impact U.S. companies. Requiring these
forms to be filed electronically by all entities would level the
playing field, since the forms are currently required to be filed
electronically only by entities subject to a reporting obligation under
Exchange Act Section 13(a) or 15(d).
    The proposed changes to Schedule TO and Forms S-4 and F-4 would
result in negligible additional compliance costs for filing persons.
Because the proposed changes would require filers to publicly disclose
information that they would already know if they are relying on the
cross-border exemptions, we believe there would be little cost in
implementing this change. Where the filer of a Schedule TO or Form S-4
or Form F-4 is not relying on the cross-border exemptions, no action
would be required. In addition, this requirement applies equally to
domestic and foreign filers. The proposed changes with respect to this
schedule and these forms would not alter in any way the circumstances
under which an offeror would incur a filing obligation under our rules.
    The proposed rule changes generally would enhance efficiency in
conducting cross-border tender offers and business combination
transactions by streamlining the application of U.S. and foreign rules
that may apply to those transactions. We expect that they would promote
capital formation by facilitating cross-border business combination
transactions conducted under multiple and possibly conflicting
regulatory systems. Some of the proposed rule revisions, such as the
changes that would broaden the availability of early commencement for
exchange offers and the applicability of the Tier II exemptions for
tender offers not subject to Rule 13e-4 or Regulation 14D, may be
viewed as enhancing competition between competing offers for the same
target securities, because they would make these provisions available
to different kinds of offers. Furthermore, the proposed rule changes
would reduce the regulatory burden on entities engaging in cross-border
business combination transactions generally, which may promote
competition by encouraging additional entities to engage in these types
of transactions. We solicit comment on whether the proposed rule
changes would impose a burden on competition or whether they would
promote efficiency, competition and capital formation. For example,
would the proposals have an adverse effect on competition that is
neither necessary nor appropriate in furtherance of the purposes of the
Exchange Act? Would the proposals have an adverse effect on U.S. or
foreign issuers? Commenters are requested to provide empirical data and
other factual support for their views where possible.

 VII. Initial Regulatory Flexibility Analysis

    This Initial Regulatory Flexibility Analysis in accordance with 5
U.S.C. 603. It relates to proposed revisions to the rules and
forms.\358\
---------------------------------------------------------------------------

    \358\ Based on an analysis of the language and legislative
history of the Regulatory Flexibility Act, Congress does not appear
to have intended the Act to apply to foreign issuers. Therefore, we
are analyzing the impact on small U.S. entities only.
---------------------------------------------------------------------------

A. Reasons for, and Objectives of, Proposed Action

    The proposed rule changes are intended primarily to facilitate the
inclusion of U.S. target security holders in cross-border business
combination transactions. The rule changes would result in further
reductions in the cost and burdens associated with including U.S.
target holders in those transactions. U.S. target holders previously
excluded from such transactions would benefit by having additional
transactions extended to them.
    The proposed rule changes are incremental in nature and would not
be a significant departure from the current cross-border exemptions.
The changes would further harmonize U.S. and foreign law and practice,
and to facilitate greater inclusion of U.S. target holders in cross-
border transactions. In many instances, the proposed changes would
codify existing staff interpretations and exemptive relief. We do not
believe any less restrictive alternative to the proposed rule
amendments exists that would serve the purpose of the tender offer and
registration requirements of the federal securities laws. We did not
identify alternatives to the proposed rules that are consistent with
their objectives and our statutory authority. The proposed rules would
not duplicate or conflict with any existing federal rule provisions.

B. Legal Basis

    We are proposing the amendments to the forms and rules under the
authority set forth in Sections 3(b), 7, 8, 9, 10, 19, and 28 of the
Securities Act, and Sections 12, 13, 14, 23, 35A, and 36 of the
Exchange Act.

C. Small Entities Subject to the Proposed Rules

    The Regulatory Flexibility Act defines ``small entity'' to mean
``small business,'' ``small organization,'' or ``small governmental
jurisdiction.'' \359\ The Commission's rules define ``small business''
and ``small organization'' for purposes of the Regulatory Flexibility
Act for each of the types of entities regulated by the Commission.\360\
A ``small business'' and ``small organization,'' when used with
reference to an issuer other than an investment company, generally
means an issuer with total assets of $5 million or less on the last day
of its most recent fiscal year. We estimate that there are
approximately 1,100 issuers that may be considered reporting small
entities.\361\ The proposed rules may affect each of the approximately
1,100 issuers that may be considered reporting small entities. We have
no data to determine how many reporting or non-reporting small
businesses may actually rely on the proposed rules, or may otherwise be
impacted by the rule proposals. Acquirors relying on the exemptions may
or may not have reporting obligations under the Exchange Act prior to
engaging in a cross-border business combination transaction. An

acquiror's ability to rely on the exemptions is not determined by the
acquiror's size or market capitalization. However, we believe that
small businesses are not typically acquirors in cross-border
transactions. We believe that the proposed amendments would result in
savings to entities (both small and large) that qualify for the
exemptions. We request comment on the number of small entities that
would be affected by our proposals, including any available empirical
data.
---------------------------------------------------------------------------

    \359\ 5 U.S.C. 601(6).
    \360\ Securities Act Rule 157 (17 CFR 230.157) and Exchange Act
Rule 0-10 (17 CFR 240.0-10) contain the applicable definitions.
    \361\ The estimated number of reporting small entities is based
on 2007 data, including the Commission's EDGAR database and Thomson
Financial's Worldscope database.
---------------------------------------------------------------------------

D. Reporting, Recordkeeping and Other Compliance Requirements

    The proposed amendments would not impose any new reporting,
recordkeeping or other compliance requirements on issuers that are
small entities.

E. Duplicative, Overlapping or Conflicting Federal Rules

    The Commission believes that there are no rules that duplicate,
overlap or conflict with the proposed amendments.

F. Significant Alternatives

    The Regulatory Flexibility Act directs the Commission to consider
significant alternatives that would accomplish the stated objective,
while minimizing any significant adverse impact on small entities. In
connection with the proposed amendments, the Commission considered the
following alternatives: (i) The establishment of differing compliance
or reporting requirements or timetables that take into account the
resources of small entities; (ii) the clarification, consolidation or
simplification of compliance and reporting requirements under the rule
for small entities; (iii) the use of performance rather than design
standards; and (iv) an exemption from coverage of the proposed
amendment, or any part thereof, for small entities.
    The proposed amendments are designed to expand and enhance the
usefulness of the current cross-border exemptions. The Commission
believes that different compliance or reporting requirements are not
necessary because the proposed amendments do not establish any new
reporting, recordkeeping, or compliance requirements for small
entities. Establishing a different standard for small business entities
would impose a greater compliance burden on small entities and would be
inconsistent with the benefits provided for all entities that are able
to avail themselves of the exemptions.

G. Solicitation of Comment

    The Commission encourages the submission of comments with respect
to any aspect of this Initial Regulatory Flexibility Analysis. We will
consider any comments in preparing the Final Regulatory Flexibility
Analysis, if the proposed amendments are adopted, and the comments will
be placed in the same public file as comments on the proposed
amendments themselves. In particular, we request comments regarding:
     The number of small entities that may be affected by the
proposals;
     The existence or nature of the potential impact of the
proposals on small entities discussed in the analysis; and
     How to quantify the impact of the proposed rules.

Commenters are asked to describe the nature of any impact and provide
empirical data supporting the extent of the impact.

VIII. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (the ``SBREFA''),\362\ a rule is ``major'' if it has
resulted, or is likely to result in:
---------------------------------------------------------------------------

    \362\ Public Law 104-121, Title II, 110 Stat. 857 (1996)
(codified in various sections of 50 U.S.C., 15 U.S.C. and as a note
to 5 U.S.C. 601).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment or
innovation.
    We request comment on whether our proposals would be a ``major
rule'' for purposes of the SBREFA. We solicit comment and empirical
data on:
     The potential effect on the U.S. economy on an annual
basis;
     Any potential increase in costs or prices for consumers or
individual industries; and
     Any potential effect on competition, investment or
innovation.

IX. Statutory Basis and Text of Proposal

    We propose amendments to the forms and rules under the authority
set forth in Sections 3(b), 7, 8, 9, 10, 19 and 28 of the Securities
Act, and Sections 12, 13, 14, 23, 35A, and 36 of the Exchange Act.

List of Subjects in 17 CFR Parts 230, 232, 239, 240, and 249

    Reporting and recordkeeping requirements, Securities.

Text of Proposals

    In accordance with the foregoing, we are proposing to amend Title
17, Chapter II of the Code of Federal Regulations as follows:

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

    1. The authority citation for Part 230 continues to read, in part,
as follows:

    Authority: 15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r,
77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78t, 78w,
78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37,
unless otherwise noted.
* * * * *
    2. Revise Sec.  230.162(a) to read as follows:

Sec.  230.162  Submission of tenders in registered exchange offers.

    (a) Notwithstanding section 5(a) of the Act (15 U.S.C. 77e(a)),
offerors may solicit tenders of securities in an exchange offer subject
to Sec.  240.13e-4(e) or Sec.  240.14d-4(b) of this chapter, and in
exchange offers conducted under Sec.  240.13e-4(i) or Sec.  240.14d-
1(d) of this chapter that are not subject to Sec.  240.13e-4(e) or
Sec.  240.14d-4(b) of this chapter to the extent permitted under Sec.
240.13e-4(i)(2)(vi) and Sec.  240.14d-1(d)(2)(x) of this chapter,
before a registration statement is effective as to the security
offered, so long as no securities are purchased until the registration
statement is effective and the tender offer has expired in accordance
with the tender offer rules.
* * * * *
    3. Revise Sec.  230.800(h)(1) to read as follows:

Sec.  230.800  Definitions for Sec. Sec.  230.800, 230.801 and 230.802.

* * * * *
    (h) * * *
    (1) Calculate percentage of outstanding securities held by U.S.
holders as of the record date for a rights offering and as of a date no
more than 60 days before the public announcement of an exchange offer
or a business combination.
* * * * *
    4. Amend Sec.  230.802 by revising paragraphs (a)(2), (a)(3),
(c)(2), (c)(3) and (c)(4) to read as follows:

Sec.  230.802  Exemption for offerings in connection with an exchange
offer or business combination for the securities of foreign private
issuers.

* * * * *
    (a) * * *
    (2) Equal treatment. The offeror must permit U.S. holders to
participate in the

exchange offer or business combination on terms at least as favorable
as those offered any other holder of the subject securities. The
offeror, however, need not extend the offer to security holders in
those states or jurisdictions that require registration or
qualification, except that the offeror must offer the same cash
alternative to security holders in any such state that it has offered
to security holders in any other state or jurisdiction.
    (3) Informational documents. (i) If the offeror publishes or
otherwise disseminates an informational document to the holders of the
subject securities in connection with the exchange offer or business
combination, the offeror must furnish that informational document,
including any amendments thereto, in English, to the Commission on Form
CB (Sec.  239.800 of this chapter) by the first business day after
publication or dissemination. If the offeror is a foreign company, it
must also file a Form F-X (Sec.  239.42 of this chapter) with the
Commission at the same time as the submission of the Form CB to appoint
an agent for service of process in the United States.
    (ii) The offeror must disseminate the informational document to
U.S. holders, including any amendments thereto, in English, on a
comparable basis to that provided to security holders in the foreign
subject company's home jurisdiction.
    (iii) If the offeror disseminates by publication in its home
jurisdiction, the offeror must publish the information in the United
States in a manner reasonably calculated to inform U.S. holders of the
offer.
* * * * *
    (c) * * *
    (2) The aggregate trading volume of the subject class of securities
on all national securities exchanges in the United States or on the OTC
market, as reported to the Financial Industry Regulatory Authority
Inc., over the 12-calendar-month period ending on a date no more than
60 days before public announcement of the offer, exceeds 10 percent of
the worldwide aggregate trading volume of that class of securities over
the same period;
    (3) The most recent annual report or annual information filed or
submitted by the issuer with securities regulators of the home
jurisdiction or with the Commission before the public announcement of
the offer indicates that U.S. holders hold more than 10 percent of the
outstanding subject class of securities; or
    (4) The offeror knows, or has reason to know, before the public
announcement of the offer, that U.S. ownership exceeds 10 percent of
the subject securities. As an example, for purposes of this paragraph,
an offeror is deemed to have reason to know information about U.S.
ownership of the subject class of securities that is publicly available
and that appears in any filing with the Commission or any regulatory
body in the issuer's jurisdiction of incorporation or (if different)
the non-U.S. jurisdiction in which the primary trading market for the
subject securities is located. This example is not intended to be
exclusive.

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

    5. The authority citation for Part 232 continues to read, in part,
as follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z-3,
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c),
80a-8, 80a-29, 80a-30, 80a-37, and 7201 et. seq.; and 18 U.S.C.
1350.
* * * * *
    6. Amend Sec.  232.101 by:
    a. Revising paragraphs (a)(1)(vi) and (a)(1)(vii);
    b. Removing and reserving paragraph (b)(7); and
    c. Revising paragraph (b)(8) to read as follows:

Sec.  232.101  Mandated electronic submissions and exceptions.

    (a) * * *
    (1) * * *
    (vi) Form CB (Sec. Sec.  239.800 and 249.480 of this chapter) filed
or submitted under Sec.  230.801 or 230.802 of this chapter or Sec.
240.13e-4(h)(8), 240.14d-1(c), or 240.14e-2(d) of this chapter;
    (vii) Form F-X (Sec.  239.42 of this chapter) when filed in
connection with a Form CB (Sec. Sec.  239.800 and 249.480 of this
chapter);
* * * * *
    (b) * * *
    (8) Form F-X (Sec.  232.42 of this chapter) if filed by a Canadian
issuer when qualifying an offering statement pursuant to the provisions
of Regulation A (Sec. Sec.  230.251-230.263 of this chapter);
* * * * *

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

    7. The authority citation for part 239 continues to read in part as
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3,
77sss, 78c, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll, 78mm, 80a-
2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29,
80a-30, and 80a-37, unless otherwise noted.
* * * * *
    8. Form S-4 (referenced in Sec.  239.25) is amended by adding a
statement regarding reliance on the cross-border exemptions and check
boxes on the cover page immediately before the ``Calculation of
Registration Fee'' table to read as follows:

    Note: The text of Form S-4 does not and this amendment will not
appear in the Code of Federal Regulations.

Form S-4 Registration Statement Under the Securities Act of 1933

* * * * *
    If applicable, place an X in the box to designate the appropriate
rule provision relied upon in conducting this transaction:
    Exchange Act Rule 13e-4(i) (Issuer Tender Offer) [ballot]
    Exchange Act Rule 14d-1(d) (Third Party Tender Offer) [ballot]
* * * * *
    9. Amend Form F-4 (referenced in Sec.  239.34) by adding a
statement regarding reliance on the cross-border exemptions and check
boxes on the cover page immediately before the ``Calculation of
Registration Fee'' table to read as follows:

    Note: The text of Form F-4 does not and this amendment will not
appear in the Code of Federal Regulations.

Form F-4 Registration Statement Under the Securities Act of 1933

* * * * *
    If applicable, place an X in the box to designate the appropriate
rule provision relied upon in conducting this transaction:
    Exchange Act Rule 13e-4(i) (Issuer Tender Offer) [ballot]
    Exchange Act Rule 14d-1(d) (Third Party Tender Offer) [ballot]
* * * * *
    10. Amend Form F-X (referenced in Sec.  239.42) by revising the
Note to General Instruction II.B.(2) to read as follows:

    Note: The text of Form F-X does not and this amendment will not
appear in the Code of Federal Regulations.

Form F-X Appointment of Agent for Service of Process and Undertaking

General Instructions

* * * * *
    II. * * *
    B. * * *
    (2) * * *

    Note: Regulation S-T Rule 101(b)(8) only permits the filing of
the Form F-X in paper if filed by a Canadian issuer when qualifying
an offering statement pursuant to the provisions of Regulation A
(Sec. Sec.  230.251--230.263 of this chapter).

* * * * *

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

    11. The authority citation for Part 240 continues to read, in part,
as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5,
78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4,
80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise
noted.
* * * * *
    12. Amend Sec.  240.13d-1 by:
    a. Removing ``; and'' from the end of paragraph (b)(1)(ii)(I);
    b. Adding paragraph (b)(1)(ii)(K); and
    c. Removing the authority citation following the section.
    The addition reads as follows:

Sec.  240.13d-1  Filing of Schedules 13D and 13G.

* * * * *
    (b)(1) * * *
    (ii) * * *
    (K) A non-U.S. institution that is the functional equivalent of any
of the institutions listed in paragraphs (b)(1)(ii)(A) through (J) of
this section, so long as the non-U.S. institution is subject to a
regulatory scheme that is comparable to the regulatory scheme
applicable to the equivalent U.S. institution; and
* * * * *
    13. Amend Sec.  240.13d-102 by:
    a. Revising Instruction 12 to the Instruction for the Cover Page
before the Notes;
    b. In Item 3 removing the period at the end of paragraphs (a), (b),
(c), and (d) and in each place adding a semicolon;
    c. In Item 3 removing the period at the end of paragraph (j) and in
its place adding a semicolon and adding paragraph (k); and
    d. In Item 10 redesignating paragraph (b) as paragraph (c) and
adding new paragraph (b).
    The revision and additions read as follows:

Sec.  240.13d-102  Schedule 13G--Information to be included in
statements filed pursuant to Sec.  240.13d-1(b), (c), and (d) and
amendments thereto filed pursuant to Sec.  240.13d-2.

* * * * *
    Instructions for Cover Page:
* * * * *
    (12) Type of Reporting Person--Please classify each ``reporting
person'' according to the following breakdown (see Item 3 of Schedule
13G) and place the appropriate Symbol on the form:

------------------------------------------------------------------------
                           Category                              Symbol
------------------------------------------------------------------------
Broker Dealer.................................................       BD
Bank..........................................................       BK
Insurance Company.............................................        IC
Investment Company............................................       IV
Investment Adviser............................................       IA
Employee Benefit Plan or Endowment Fund.......................       EP
Parent Holding Company/Control Person.........................        HC
Savings Association...........................................       SA
Church Plan...................................................         CP
Corporation...................................................         CO
Partnership...................................................       PN
Individual....................................................       IN
Non-U.S. Institution..........................................       FI
Other.........................................................       OO
------------------------------------------------------------------------

* * * * *

Item 3. * * *

    (k) [ ] A non-U.S. institution that is the functional equivalent of
any of the institutions listed in paragraphs (a)-(j) of this Item.
Please specify the type of institution: ------
* * * * *

Item 10. Certification

* * * * *
    (b) The following certification shall be included if the statement
is filed pursuant to Sec.  240.13d-1(b)(1)(ii)(K):
    By signing below I certify that, to the best of my knowledge and
belief, the foreign regulatory scheme applicable to [insert particular
category of institutional investor] is comparable to the regulatory
scheme applicable to the functionally equivalent U.S. institution(s). I
also undertake to furnish to the Commission staff, upon request,
information that would otherwise be disclosed in a Schedule 13D.
* * * * *
    14. Amend Sec.  240.13e-3 by revising paragraph (g)(6) to read as
follows:

Sec.  240.13e-3  Going private transactions by certain issuers or their
affiliates.

* * * * *
    (g) * * *
    (6) Any tender offer or business combination made in compliance
with Sec.  230.802 of this chapter, Sec.  240.13e-4(h)(8) or Sec.
240.14d-1(c) or any other kind of transaction that otherwise meets the
conditions for reliance on the cross-border exemptions set forth in
Sec.  240.13e-4(h)(8), 240.14d-1(c) or 230.802(a) of this chapter
except for the fact that it is not technically conducted under those
rules.
    15. Amend Sec.  240.13e-4 by:
    a. Revising the introductory text of paragraph (i);
    b. Revising paragraph (i)(2)(ii);
    c. Adding paragraphs (i)(2)(v) and (vi); and
    d. Revising paragraph 2.i. to the Instructions to paragraph (h)(8)
and (i).
    The revisions and additions read as follows:

Sec.  240.13e-4  Tender offers by issuers.

* * * * *
    (i) Cross-border tender offers (Tier II). Any issuer tender offer
(including any exchange offer) that meets the conditions in paragraph
(i)(1) of this section shall be entitled to the exemptive relief
specified in paragraph (i)(2) of this section, provided that such
issuer tender offer complies with all the requirements of this section
other than those for which an exemption has been specifically provided
in paragraph (i)(2) of this section. In addition, any issuer tender
offer (including any exchange offer) subject only to the requirements
of section 14(e) of the Act and Regulation 14E (Sec. Sec.  240.14e-1
through 240.14e-8) thereunder that meets the conditions in paragraph
(i)(1) of this section also shall be entitled to the exemptive relief
specified in paragraph (i)(2) of this section, to the extent needed
under the requirements of Regulation 14E provided the tender offer
complies with all other requirements of Regulation 14E other than those
for which an exemption has been specifically provided in paragraph
(i)(2) of this section:
* * * * *
    (2) * * *
    (ii) Equal treatment--separate U.S. and foreign offers.
Notwithstanding the provisions of paragraph (f)(8) of this section, an
issuer or affiliate conducting an issuer tender offer meeting the
conditions of paragraph (i)(1) of this section may separate the offer
into multiple offers: One offer made to U.S. holders and all holders of
American Depositary Receipts representing interests in the subject
securities and one or more offers made to non-U.S. holders. The U.S.
offer must be made on terms at least as favorable as those offered any
other holder of the same class of securities that is the subject of the
tender offers. U.S. holders may be included in the foreign offer(s)
only where the laws of the jurisdiction governing such foreign offer(s)
expressly preclude the exclusion of U.S. holders from the foreign
offer(s) and where the offer materials distributed to U.S. holders
fully and adequately disclose the risks of participating in the foreign
offer(s).
* * * * *
    (v) Suspension of withdrawal rights during counting of tendered
securities. The issuer or affiliate may suspend withdrawal rights
required under

paragraph (f)(2) of this section at the end of the offer and during the
period that securities tendered into the offer are being counted,
provided that:
    (A) The issuer or affiliate has provided an offer period including
withdrawal rights for a period of at least 20 U.S. business days;
    (B) At the time withdrawal rights are suspended, all offer
conditions have been satisfied or waived, except to the extent that the
issuer or affiliate is in the process of determining whether a minimum
acceptance condition included in the terms of the offer has been
satisfied by counting tendered securities; and
    (C) Withdrawal rights are suspended only during the counting
process and are reinstated immediately thereafter, except to the extent
that they are terminated through the acceptance of tendered securities.
    (vi) Early commencement. Notwithstanding the requirements of
section 5(a) of the Act (15 U.S.C. 77e(a)), the issuer or affiliate in
an exchange offer not subject to this section may solicit tenders
before a registration statement is effective as to the security offered
to the same extent as would be permitted pursuant to paragraph (e)(2)
of this section, so long as no securities are purchased until the
registration statement is effective and the tender offer has expired,
and the issuer or affiliate provides withdrawal rights to the same
extent as would be required if the exchange offer were subject to the
requirements of section 13(e) of the Act (15 U.S.C. 78m(e)) and
paragraph (f)(2)(i) of this section. If a material change occurs in the
information published, sent or given to security holders, the issuer or
affiliate must comply with the provisions of paragraph (e)(3) of this
section in disseminating information about the material change to
security holders, including the minimum periods during which the offer
must remain open after notice of such change is provided to security
holders.
    Instructions to paragraph (h)(8) and (i) of this section:
* * * * *
    2. * * *
    i. Calculate the U.S. ownership as of a date no more than 60 days
before the public announcement of the tender offer;
* * * * *
    16. Amend Sec.  240.14d-1 by:
    a. Revising paragraph (a);
    b. Revising paragraph (d) introductory text, paragraphs (d)(2)(ii)
and (d)(2)(iv);
    c. Adding paragraphs (d)(2)(vi), (d)(2)(vii), (d)(2)(viii),
(d)(2)(ix), and (d)(2)(x); and
    d. Revising Instructions 2.i., 3.ii., 3.iii., and 3.iv. to the
Instructions to paragraphs (c) and (d).
    The revisions and additions read as follows:

Sec.  240.14d-1  Scope of and definitions applicable to Regulations 14D
and 14E.

* * * * *
    (a) Scope. Regulation 14D (Sec. Sec.  240.14d-1 through 240.14d-
101) shall apply to any tender offer which is subject to section
14(d)(1) of the Act (15 U.S.C. 78n(d)(1)), including, but not limited
to, any tender offer for securities of a class described in that
section which is made by an affiliate of the issuer of such class.
Regulation 14E (Sec. Sec.  240.14e-1 through 240.14e-8) shall apply to
any tender offer for securities (other than exempted securities) unless
otherwise noted therein.
* * * * *
    (d) Tier II. A person conducting a tender offer (including any
exchange offer) that meets the conditions in paragraph (d)(1) of this
section shall be entitled to the exemptive relief specified in
paragraph (d)(2) of this section, provided that such tender offer
complies with all the requirements of this section other than those for
which an exemption has been specifically provided in paragraph (d)(2)
of this section. In addition, a person conducting a tender offer
subject only to the requirements of section 14(e) of the Act (15 U.S.C.
78n(e)) and Regulation 14E thereunder that meets the conditions in
paragraph (d)(1) of the section also shall be entitled to the exemptive
relief specified in paragraph (d)(2) of this section, to the extent
needed pursuant to the requirements of Regulation 14E, provided that
the tender offer complies with all requirements of Regulation 14E other
than those for which an exemption has been specifically provided in
paragraph (d)(2) of this section:
* * * * *
    (2) * * *
    (ii) Equal treatment--separate U.S. and foreign offers.
Notwithstanding the provisions of Sec.  240.14d-10, a bidder conducting
a tender offer meeting the conditions of paragraph (d)(1) of this
section may separate the offer into multiple offers: One offer made to
U.S. holders and all holders of American Depositary Receipts
representing interests in the subject securities and one or more offers
made to non-U.S. holders. The U.S. offer must be made on terms at least
as favorable as those offered any other holder of the same class of
securities that is the subject of the tender offers. U.S. holders may
be included in the foreign offer(s) only where the laws of the
jurisdiction governing such foreign offer(s) expressly preclude the
exclusion of U.S. holders from the foreign offer(s) and where the offer
materials distributed to U.S. holders fully and adequately disclose the
risks of participating in the foreign offer(s).
* * * * *
    (iv) Prompt payment. Payment made in accordance with the
requirements of the home jurisdiction law or practice will satisfy the
requirements of Sec.  240.14e-1(c). Where payment may not be made on a
more expedited basis under home jurisdiction law or practice, payment
for securities tendered during any subsequent offering period within 14
business days of the date of tender will satisfy the prompt payment
requirements of Sec.  240.14d-11(e). For purposes of this paragraph, a
business day is determined with reference to the target's home
jurisdiction.
* * * * *
    (vi) Length of subsequent offering period. Notwithstanding the
provisions of Sec.  240.14d-11, the maximum time period for a
subsequent offering period may extend beyond 20 U.S. business days.
    (vii) Payment of interest on securities tendered during subsequent
offering period. Notwithstanding the requirements of Sec.  240.14d-
11(f), the bidder may pay interest on securities tendered during a
subsequent offering period, if required under applicable foreign law.
Paying interest on securities tendered during a subsequent offering
period in accordance with this section will not be deemed to violate
Sec.  240.14d-10(a)(2).
    (viii) Suspension of withdrawal rights during counting of tendered
securities. The bidder may suspend withdrawal rights required under
section 14(d)(5) of the Act (15 U.S.C. 78n(d)(5)) at the end of the
offer and during the period that securities tendered into the offer are
being counted, provided that:
    (A) The bidder has provided an offer period including withdrawal
rights for a period of at least 20 U.S. business days;
    (B) At the time withdrawal rights are suspended, all offer
conditions have been satisfied or waived, except to the extent that the
bidder is in the process of determining whether a minimum acceptance
condition included in the terms of the offer has been satisfied by
counting tendered securities; and
    (C) Withdrawal rights are suspended only during the counting
process and are reinstated immediately thereafter, except to the extent
that they are terminated through the acceptance of tendered securities.

    (ix) Mix and match elections and the subsequent offering period.
Notwithstanding the requirements of Sec.  240.14d-11(b), where the
bidder offers target security holders a choice between different forms
of consideration, it may establish a ceiling on one or more forms of
consideration offered. Notwithstanding the requirements of Sec.
240.14d-11(f), a bidder that establishes a ceiling on one or more forms
of consideration offered pursuant to this subsection may offset
elections of tendering security holders against one another, subject to
proration, so that elections are satisfied to the greatest extent
possible and pro rated to the extent that they cannot be satisfied in
full. Such a bidder also may separately offset and pro rate securities
tendered during the initial offering period and those tendered during
any subsequent offering period, notwithstanding the requirements of
Sec.  240.14d-10(c).
    (x) Early commencement. Notwithstanding the requirements of section
5(a) of the Act (15 U.S.C. 77e(a)), the bidder in an exchange offer not
subject to Sec.  240.14d-4(b) may solicit tenders before a registration
statement is effective as to the security offered to the same extent as
would be permitted pursuant to Sec.  240.14d-4(b), so long as no
securities are purchased until the registration statement is effective
and the tender offer has expired, and the bidder provides withdrawal
rights to the same extent as would be required if the exchange offer
were subject to the requirements of Sec.  240.14d-7. If a material
change occurs in the information published, sent or given to security
holders, the bidder must comply with the provisions of Sec.  240.14d-
4(d) in disseminating information about the material change to security
holders, including the minimum periods during which the offer must
remain open after notice of such change is provided to security
holders.
    Instructions to paragraphs (c) and (d):
* * * * *
    2. * * *
    i. Calculate the U.S. ownership as of a date no more than 60 days
before the public announcement of the tender offer;
* * * * *
    3. * * *
    ii. The aggregate trading volume of the subject class of securities
on all national securities exchanges in the United States or on the OTC
market, as reported to the Financial Industry Regulatory Authority,
Inc. over the 12-calendar-month period ending on a date no more than 60
days before public announcement of the offer, exceeds 10 percent (40
percent in the case of paragraph (d) of this section) of the worldwide
aggregate trading volume of that class of securities over the same
period;
    iii. The most recent annual report or annual information filed or
submitted by the issuer with securities regulators of the home
jurisdiction or with the Commission before the public announcement of
the offer indicates that U.S. holders hold more than 10 percent (40
percent in the case of paragraph (d) of this section) of the
outstanding subject class of securities; or
    iv. The bidder knows or has reason to know, before the public
announcement of the offer, that the level of U.S. ownership exceeds 10
percent (40 percent in the case of paragraph (d) of this section) of
such securities. As an example, for purposes of this Instruction, a
bidder is deemed to have reason to know information about U.S.
ownership of the subject class of securities that is publicly available
and that appears in any filing with the Commission or any regulatory
body in the issuer's jurisdiction of incorporation or (if different)
the non-U.S. jurisdiction in which the primary trading market for the
subject securities is located. This example is not intended to be
exclusive.
* * * * *
    17. Amend Sec.  240.14d-100 by adding a statement regarding
reliance on the cross-border exemptions and check boxes on the cover
page immediately before the General Instructions to read as follows:

Sec.  240.14d-100  Schedule TO. Tender offer statement under section