[Federal Register Volume 70, Number 124 (Wednesday, June 29, 2005)]
[Notices]
[Pages 37456-37458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3382]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51905; File No. SR-NASD-2005-006]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendments 
Nos. 1 and 2 Thereto to Require Semi-Annual Financial Reporting by 
Foreign Private Issuers

June 22, 2005.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder, \2\ notice is hereby given 
that on January 18, 2005, the National Association of Securities 
Dealers, Inc. (``NASD''), through its subsidiary, the Nasdaq Stock 
Market, Inc. (``Nasdaq''), filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by Nasdaq. Nasdaq submitted Amendment No. 1 to its proposed rule change 
on February 4, 2005 \3\ and submitted Amendment No. 2 to its proposed 
rule change on June 6, 2005 \4\. The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 modified the proposed rule language to 
require that interim financial information be published on a press 
release that would also be submitted on a Form 6-K. As originally 
proposed, the rule language required that interim financial 
information be submitted on a press release or on a Form 6-K.
    \4\ Amendment No. 2 made technical corrections to the filing and 
replaced and superceded the original filing and Amendment No. 1 in 
its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq proposes to require that foreign private issuers listed on 
Nasdaq provide semi-annual financial information. Nasdaq will implement 
the proposed rule change for interim periods ending after January 1, 
2006.
    The text of the proposed rule change is below. Proposed additions 
are italicized.\5\
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    \5\ The proposed rule change is marked to show changes to the 
rule text appearing in the electronic NASD Manual available at 
http://www.nasd.com. No pending rule filings would affect the text 
of this rule.
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4350. Qualitative Listing Requirements for Nasdaq National Market and 
Nasdaq SmallCap Market Issuers Except for Limited Partnerships

    Nasdaq shall review the issuer's past corporate governance 
activities. This review may include activities taking place while the 
issuer is listed on Nasdaq or an exchange that imposes corporate 
governance requirements, as well as activities taking place after a 
formerly listed issuer is no longer listed on Nasdaq or an exchange 
that imposes corporate governance requirements. Based on such review, 
Nasdaq may take any appropriate action, including placing of 
restrictions on or additional requirements for listing, or the denial 
of listing of a security if Nasdaq determines that there have been 
violations or evasions of such corporate

[[Page 37457]]

governance standards. Such determinations shall be made on a case-by-
case basis as necessary to protect investors and the public interest.
    (a) No change
    (b) Distribution of Annual and Interim Reports
    (1) No change
    (2) No change
    (3) No change
    (4) Each foreign private issuer shall publish, in a press release, 
which would also be submitted on a Form 6-K, an interim balance sheet 
and income statement as of the end of its second quarter. This 
information, which must be presented in English but does not have to be 
reconciled to U.S. GAAP, must be provided not later than six months 
following the end of the issuer's second quarter.
    (c)-(n) No change

4360. Qualitative Listing Requirements for Nasdaq Issuers That Are 
Limited Partnerships

    (a) No change
    (b) Distribution of Annual and Interim Reports
    (1) No change
    (2)(A)-(B) No change
    (C) Each foreign private issuer that is a limited partnership shall 
publish, in a press release, which would also be submitted on a Form 6-
K, an interim balance sheet and income statement as of the end of its 
second quarter. This information, which must be presented in English 
but does not have to be reconciled to U.S. GAAP, must be provided not 
later than six months following the end of the issuer's second quarter. 
Such information shall be distributed to limited partners if required 
by statute or regulation in the jurisdiction in which the limited 
partnership is formed or doing business or by the terms of the 
partnership's limited partnership agreement.
    (c)-(i) No change
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Nasdaq included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. Nasdaq has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Pursuant to Nasdaq and SEC rules, domestic issuers are required to 
file quarterly financial reports. While non-U.S. issuers are not 
subject to this requirement and are only required to file financial 
reports annually, \6\ most non-U.S. issuers listed on Nasdaq do in fact 
provide more frequent disclosure to investors. Nasdaq believes that it 
would be beneficial to create a uniform standard, applicable to all 
Nasdaq-listed foreign private issuers, to assure that investors have 
access to more recent financial information. As such, Nasdaq proposes 
to require that non-U.S. issuers provide, in a press release that would 
also be submitted on a Form 6-K, an interim balance sheet and semi-
annual income statement, not later than six months following the end of 
the issuer's second quarter. Under the proposed rule, the information 
provided would be required to be translated into English, but would not 
have to be reconciled to U.S. Generally Accepted Accounting Principles 
(``GAAP'').
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    \6\ This information is required to be filed six months after 
the company's fiscal year-end. Accordingly, the only financial 
information presently available could be as much as 18-months old.
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    In order to allow sufficient time for non-U.S. issuers to modify 
any necessary practices regarding the preparation of interim financial 
reports, Nasdaq proposes that this new rule not be immediately 
effective. Instead, the proposed rule will be effective for interim 
periods ending after January 1, 2006.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\7\ in general and with 
section 15A(b)(6) of the Act,\8\ in particular, in that it is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, remove impediments to a free 
and open market and a national market system, and, in general, to 
protect investors and the public interest. As noted above, Nasdaq 
believes that the proposed rule will provide enhanced disclosure to 
investors regarding foreign private issuers that trade on Nasdaq.
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    \7\ 15 U.S.C. 78o-3.
    \8\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASD-2005-006 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NASD-2005-006. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent

[[Page 37458]]

amendments, all written statements with respect to the proposed rule 
change that are filed with the Commission, and all written 
communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for inspection and copying in the Commission's Public 
Reference Room. Copies of such filing also will be available for 
inspection and copying at the principal office of the NASD. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASD-2005-006 and should be 
submitted on or before July 20, 2005. 

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-3382 Filed 6-28-05; 8:45 am]
BILLING CODE 8010-01-P