The Securities and Exchange Commission today announced that at its open meeting on Dec. 13, 2006, the Commission will consider a staff recommendation to repropose new rules governing when a foreign private issuer may deregister its securities under the Securities Exchange Act of 1934 and cease making filings with the Commission.
The staff intends to recommend deregistration thresholds based solely on trading volume. The original proposal had used thresholds based primarily on the percentage of U.S. holders, as well as trading volume.
"We believe that the new proposal will better serve the needs of both U.S. investors and foreign issuers by providing a clear, consistent, easy-to-apply, and fair standard pursuant to which foreign registrants may withdraw from our capital markets and end their obligations to comply with our rules," commented John White, Director of the Commission's Division of Corporation Finance. "The Commission remains committed to investor protection as well as sensitive to the opportunities and challenges of increasing globalization and cross-border regulatory cooperation. This proposal should continue to provide appropriate protections for U.S. investors while promoting capital formation in the U.S. and making our markets more attractive to foreign companies."
Reproposal is necessary because basing the threshold solely on trading volume was not addressed fully in the Commission's original December 2005 proposal and request for comment. The reproposal also will reflect modifications, in response to comments, of other conditions to deregistration outlined in the original proposal. Staff will recommend a 30-day comment period for the reproposed rules and expects to recommend final rules in the first quarter of 2007.
