[Federal Register Volume 70, Number 139 (Thursday, July 21, 2005)]
[Rules and Regulations]
[Pages 42234-42249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14311]



[[Page 42233]]

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Part III





Securities and Exchange Commission





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17 CFR Parts 230, 239, 240, and 249



Use of Form S-8, Form 8-K, and Form 20-F by Shell Companies; Final Rule

  Federal Register / Vol. 70, No. 139 / Thursday, July 21, 2005 / Rules 
and Regulations  

[[Page 42234]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 230, 239, 240 and 249

[Release Nos. 33-8587; 34-52038; International Series Release No. 1293; 
File No. S7-19-04]
RIN 3235-AH88


Use of Form S-8, Form 8-K, and Form 20-F by Shell Companies

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission is adopting rules and 
rule amendments relating to filings by reporting shell companies. We 
are defining a ``shell company'' as a registrant with no or nominal 
operations and either no or nominal assets, assets consisting solely of 
cash and cash equivalents, or assets consisting of any amount of cash 
and cash equivalents and nominal other assets. The rules and rule 
amendments prohibit the use of Form S-8 under the Securities Act of 
1933 by shell companies. In addition, they require a shell company that 
is reporting an event that causes it to cease being a shell company to 
disclose the same type of information that it would be required to 
provide in registering a class of securities under the Securities 
Exchange Act of 1934. These provisions are intended to protect 
investors by deterring fraud and abuse in our securities markets 
through the use of reporting shell companies.

DATES: Effective August 22, 2005, except Item 5.06 of Exchange Act Form 
8-K (referenced in Sec.  249.308) will take effect on November 7, 2005.

FOR FURTHER INFORMATION CONTACT: Kevin M. O'Neill, Special Counsel, 
Office of Small Business Policy, Division of Corporation Finance, 
Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549, at (202) 551-3260.

SUPPLEMENTARY INFORMATION: We are adopting rules and rule amendments 
designed to protect investors by deterring fraud and abuse in our 
securities markets through the use of reporting shell companies.\1\ We 
are amending Form S-8 \2\ under the Securities Act of 1933 \3\ to 
prohibit use of the form by shell companies. We also are amending the 
requirements of Form 8-K \4\ under the Securities Exchange Act of 1934 
as they apply to shell companies. In addition, we are amending Rule 405 
\5\ under the Securities Act and Rule 12b-2 \6\ under the Exchange Act 
to define the terms ``business combination related shell company'' and 
``shell company,'' and amending Rule 12b-2 under the Exchange Act to 
revise the definition of the term ``succession.'' Further, we are 
amending Rule 13a-14 \7\ and Rule 15d-14 \8\ under the Exchange Act, 
adding new Rule 13a-19 \9\ and new Rule 15d-19 \10\ under the Exchange 
Act, and amending Form 20-F \11\ under the Exchange Act to address the 
reporting obligations of foreign private issuers that are shell 
companies. Finally, we are amending Form 10-Q,\12\ Form 10-QSB,\13\ 
Form 10-K,\14\ Form 10-KSB,\15\ and Form 20-F under the Exchange Act to 
require companies to indicate on the cover page of those forms whether 
they fall within the definition of ``shell company.''
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    \1\ In this release, we use the term reporting shell companies 
to refer to shell companies that have an obligation to file reports 
under Section 13 (15 U.S.C. 78m) or Section 15(d) (15 U.S.C. 78o(d)) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
    \2\ 17 CFR 239.16b.
    \3\ 15 U.S.C. 77a et seq.
    \4\ 17 CFR 249.308.
    \5\ 17 CFR 230.405.
    \6\ 17 CFR 240.12b-2.
    \7\ 17 CFR 240.13a-14.
    \8\ 17 CFR 240.15d-14.
    \9\ 17 CFR 240.13a-19.
    \10\ 17 CR 240.15d-19.
    \11\ 17 CFR 249.220f.
    \12\ 17 CFR 249.308a.
    \13\ 17 CFR 249.308b.
    \14\ 17 CFR 249.310.
    \15\ 17 CFR 249.310b.
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    The rules and rule amendments we are adopting today do not address 
the relative merits of shell companies. We recognize that companies and 
their professional advisors often use shell companies for many 
legitimate corporate structuring purposes. Similarly, our definition 
and use of the term ``shell company'' is not intended to imply that 
shell companies are inherently fraudulent. Rather, these rules target 
regulatory problems that we have identified where shell companies have 
been used as vehicles to commit fraud and abuse our regulatory 
processes.

I. Introduction

    On April 15, 2004, we proposed rules and rule amendments related to 
filings by reporting shell companies.\16\ We proposed to define the 
term ``shell company.'' We also proposed to prohibit the use of Form S-
8 under the Securities Act by shell companies. Additionally, we 
proposed to amend Form 8-K under the Exchange Act to require a shell 
company, when reporting an event that causes it to cease being a shell 
company, to file with the Commission the same type of information that 
it would be required to file in registering a class of securities under 
the Exchange Act.
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    \16\ Release No. 33-8407, Use of Form S-8 and Form 8-K by Shell 
Companies (Apr. 15, 2004) [69 FR 21650].
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    In response to these proposals, we received approximately 30 
comment letters from various interested parties, including investors, 
issuers, accountants, lawyers, and organizations. We have considered 
all of the comment letters and have incorporated certain of the 
suggestions in those letters in the final rules.
    The provisions we adopt today address the inappropriate use of Form 
S-8 registration statements by reporting shell companies to circumvent 
the registration and prospectus delivery requirements of the Securities 
Act. Because shell companies do not operate businesses and, hence, 
rarely have employees, we see little legitimate basis for shell 
companies to use Form S-8. For this reason, and because of the history 
of abuse of Form S-8 by reporting shell companies, we are prohibiting 
shell companies from using Form S-8 until 60 days after they cease 
being shell companies and file required information. We have, however, 
included limited exceptions to this prohibition for shell companies 
that are used in certain change of domicile or business combination 
transactions.
    The provisions we adopt today also address the use of Form 8-K to 
report ``reverse merger'' and other transactions in which a reporting 
shell company ceases being a shell company, generally by combining with 
a formerly private operating business. Through such a transaction, the 
private operating business, in effect, becomes a reporting company. 
These transactions generally take one of two forms:
     In the most common type of transaction, a ``reverse 
merger,'' the private business merges into the shell company, with the 
shell company surviving and the former shareholders of the private 
business controlling the surviving entity.
     In another common type of transaction, a ``back door 
registration,'' the shell company merges into the formerly private 
company, with the formerly private company surviving and the 
shareholders of the shell company becoming shareholders of the 
surviving entity.\17\
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    \17\ This was the type of transaction involved in the Lisa 
Roberts, Director of NASDAQ Listing Qualifications interpretive 
letter, which is discussed in footnote 36, below.

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    In these transactions, the reporting company has an obligation to 
file current reports on Form 8-K to report both the entry into a 
material non-ordinary course agreement providing for the transaction 
and the completion of the transaction. Specifically, in both types of 
transactions, the entry into the agreement would require a report under 
Item 1.01 of Form 8-K (Entry Into a Material Definitive Agreement) by 
the shell company. The completion of the transaction would be 
reportable under either or both of Item 2.01 of Form 8-K (Completion of 
Acquisition or Disposition of Assets) and Item 5.01 of Form 8-K 
(Changes in Control of Registrant) by the surviving entity.\18\ Audited 
financial statements and pro forma financial information would be 
required to be filed under Item 9.01 of Form 8-K (Financial Statements 
and Exhibits) for transactions reportable under Item 2.01.\19\
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    \18\ In a back door registration transaction where time elapses 
between the entry into the agreement and the completion of the 
transaction, the shell company would incur the obligation to file 
the Item 1.01 Form 8-K at the time of entry into the agreement and 
either the shell company or the issuer that succeeds to the 
reporting obligation of the shell company by operation of either 
Rule 12g-3 (17 CFR 240.12g-3) or Rule 15d-5 (17 CFR 240.15d-5) under 
the Exchange Act would be obligated to file the Item 2.01 or Item 
5.01 (or both) Form 8-K at the time of completion of the 
transaction. In a back door registration transaction that is 
simultaneously entered into and completed, or where the shell 
company has not yet satisfied its Item 1.01 obligation at the time 
of completion of the transaction, either the shell company or the 
issuer that succeeds to the reporting obligation of the shell 
company by operation of either Rule 12g-3 or Rule 15d-5 under the 
Exchange Act would be required to satisfy the shell company's 
obligation to file a Form 8-K under Item 1.01, as well as any other 
reporting obligations of the shell company (including obligations to 
file reports on Form 8-K pursuant to other Items of that Form).
    \19\ Other than new Item 5.06 of Form 8-K, the rule and form 
amendments adopted today are not intended to impose any new event 
filing requirements under Form 8-K.
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II. Adopted Rules and Rule Amendments

    We are adopting the rules and rule amendments substantially as 
proposed. The substantive changes to the proposals, as discussed below, 
are:
     We have revised the definition of ``shell company'' to 
specify the manner in which assets are to be determined and to exclude 
asset-backed issuers; \20\
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    \20\ ``Asset-backed issuer'' is defined in Item 1101(b) of 
Regulation AB [17 CFR 229.1101(b)].
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     We have added a definition of the term ``business 
combination related shell company'' to specify those shell companies 
that are used to effect certain change in domicile and business 
combination transactions;
     We have provided limited exceptions to the amendments to 
Form S-8, Form 8-K, and Form 20-F for business combination related 
shell companies;
     We have added new Item 5.06 to Form 8-K to require shell 
companies (other than business combination related shell companies) to 
report transactions that cause them to cease being shell companies;
     We have added a check box to Form 10-Q, Form 10-QSB, Form 
10-K, Form 10-KSB, and Form 20-F to identify shell companies filing 
those forms; and
     We have adopted rules and rule amendments requiring a 
foreign private issuer shell company to file a ``shell company report'' 
on Form 20-F to report a transaction that causes it to cease being a 
shell company.\21\
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    \21\ The term ``foreign private issuer'' is defined in Exchange 
Act Rule 3b-4(c) [17 CFR 240.3b-4(c)]. A foreign private issuer is a 
non-government foreign issuer, except for a company that (1) has 
more than 50% of its outstanding voting securities directly or 
indirectly held of record by U.S. residents and (2) has either a 
majority of its executive officers or directors residing in or being 
citizens of the United States, more than 50% of its assets located 
in the United States, or its business principally administered in 
the United States.
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    We are adopting the definition of the term ``shell company'' 
substantially as proposed. The adopted definition includes minor 
modifications, including:
     An exclusion for asset-backed issuers that might 
inadvertently fall within the definition;
     A clarification that a company would still be a shell 
company if its assets consist of any amount of cash and cash 
equivalents, as well as nominal other assets; and
     A clarification that the determination of the company's 
assets (including cash and cash equivalents) for purposes of the 
definition must be limited to the amount of assets that would be 
reflected on the company's balance sheet prepared in accordance with 
U.S. generally accepted accounting principles on the date of that 
determination.
    We have defined the term ``business combination related shell 
company.'' We have adopted this definition to identify the subset of 
shell companies for which certain of the amendments to Form S-8, Form 
8-K, and Form 20-F will not apply. We also have revised the definition 
of ``succession'' under the Exchange Act, as proposed, to capture 
certain transactions involving shell companies.
    We are adopting amendments to Form S-8 that prohibit shell 
companies from using that form to register offerings of securities. A 
former shell company will become eligible to use Form S-8 to register 
offerings of securities 60 calendar days after it ceases being a shell 
company and files information equivalent to what it would be required 
to file if it were registering a class of securities on Form 10,\22\ 
Form 10-SB,\23\ or Form 20-F under the Exchange Act. We are adopting a 
limited exception to the Form S-8 prohibition that permits a former 
business combination related shell company to use Form S-8 immediately 
after it ceases being a shell company and files the required 
information.
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    \22\ 17 CFR 249.210.
    \23\ 17 CFR 249.210b.
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    The amendments to Form 8-K that we are adopting today apply to 
reporting shell companies, other than those that are foreign private 
issuers. The amendments require such a company, when reporting on Form 
8-K an event that causes it to cease being a shell company, to include 
in that report the information that it would be required to file to 
register a class of securities under Section 12 of the Exchange Act 
\24\ using Form 10 or Form 10-SB. The report is required to be filed 
within the same filing period as generally is required for other Form 
8-K reports, which is within four business days after completion of the 
transaction. Further, the extension of time that otherwise may be 
permitted to file financial statements and pro forma financial 
information reflecting the new financial profile of the company 
following completion of a significant acquisition would be eliminated 
for shell companies. We are adopting similar reporting requirements for 
foreign private issuers on Form 20-F.
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    \24\ 15 U.S.C. 78l.
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    Finally, we are adding a check box to Form 10-Q, Form 10-QSB, Form 
10-K, Form 10-KSB, and Form 20-F to allow market participants and 
regulators to identify shell companies more easily.

A. Definition of ``Shell Company''

1. Discussion of the Proposal
    We proposed to define the term ``shell company'' as a company with 
no or nominal operations, and with no or nominal assets or assets 
consisting solely of cash and cash equivalents.\25\ We proposed that 
this definition be added to Rule 405 under the Securities Act and Rule 
12b-2 under the Exchange Act. We indicated in the proposing release 
that we intentionally were not proposing to use the term ``blank check

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company'' used in Rule 419 \26\ under the Securities Act because we 
believe the term ``shell company'' and our proposed definition of the 
term better describe the type of company involved in the schemes that 
we are attempting to address, use criteria that are more specific, and 
would be easier to apply.
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    \25\ As discussed in the proposing release, we intended that a 
shell company formed solely for the purpose of changing a company's 
domicile or completing a business combination transaction with 
another company would fall within the definition of shell company.
    \26\ 17 CFR 230.419.
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2. Comments on the Proposal
    Approximately ten commenters expressed their views regarding the 
proposed definition of ``shell company.'' Three commenters asked that 
the terms ``nominal operations'' and ``nominal assets'' be defined.\27\ 
These commenters sought more guidance as to the meaning of these terms 
and quantitative thresholds for the term ``nominal.'' One of these 
commenters requested an objective test, such as specific quantitative 
thresholds tied to specific dollar amounts.\28\
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    \27\ See letters from L. Stephen Albright, North American 
Securities Administrators Association, Inc., and Stoecklein Law 
Group.
    \28\ See letter from North American Securities Administrators 
Association, Inc.
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    Another commenter suggested that the proposed definition be 
modified to clarify that nominal assets appearing on a balance sheet 
prepared other than in accordance with generally accepted accounting 
principles do not qualify as assets for purposes of avoiding 
classification as a shell company.\29\ Two commenters expressed support 
for a definition based on the term ``blank check company'' in 
Securities Act Rule 419 to describe the types of entities that should 
be subject to the Form S-8 and Form 8-K proposals.\30\
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    \29\ See letter from Simon M. Lorne.
    \30\ See letters from David N. Feldman and Conrad C. Lysiak.
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3. Final Rules
    As adopted, Securities Act Rule 405 and Exchange Act Rule 12b-2 
define a ``shell company'' as a company, other than an asset-backed 
issuer, with:
     No or nominal operations; and
     Either:

--No or nominal assets;
--Assets consisting solely of cash and cash equivalents; or
--Assets consisting of any amount of cash and cash equivalents and 
nominal other assets.

    For purposes of this definition, the determination of a company's 
assets (including cash and cash equivalents) must be based on the 
amounts that would be reflected on the company's balance sheet prepared 
in accordance with U.S. generally accepted accounting principles on the 
date of that determination. We have added the language ``or assets 
consisting of any amount of cash and cash equivalents and nominal other 
assets'' to further clarify the definition. This clarification is 
consistent with the intended meaning of the proposed definition.
    After considering the comments on our proposed definition of shell 
company, we continue to believe that the proposed definition best 
describes the types of companies involved in the schemes we are 
attempting to address and can be applied with certainty.\31\ We do not 
believe that the suggestions in the comment letters would result in a 
significantly improved definition of shell company. Further, we believe 
that the definition reflects the traditional understanding of the term 
``shell company'' in the area of corporate finance.
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    \31\ One commenter discussed the application of the proposals to 
``living dead'' companies. See letter from Mike Liles, Jr. As 
described in this comment letter, a ``living dead'' company is a 
former operating company with minimal or limited operations. We 
believe that a former operating company that meets the assets and 
operations standards in the definition of shell company would be 
subject to the rules and rule amendments that we are adopting today.
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    We are not defining the term ``nominal,'' as we believe that this 
term embodies the principle that we seek to apply and is not 
inappropriately vague or ambiguous.\32\ We have considered the comment 
that a quantitative threshold would improve the definition of shell 
company; however, we believe that quantitative thresholds would, in 
this context, present a serious potential problem, as they would be 
more easily circumvented. We believe further specification of the 
meaning of ``nominal'' in the definition of ``shell company'' is 
unnecessary and would make circumventing the intent of our regulations 
and the fraudulent misuse of shell companies easier.
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    \32\ We have become aware of a practice in which a promoter of a 
company and/or affiliates of the promoter appear to place assets or 
operations within an entity with the intent of causing that entity 
to fall outside of the definition of ``blank check company'' in 
Securities Act Rule 419. The promoter will then seek a business 
combination transaction for the company, with the assets or 
operations being returned to the promoter or affiliate upon the 
completion of that business combination transaction. It is likely 
that similar schemes will be undertaken with the intention of 
evading the definition of shell company that we are adopting today. 
In our view, where promoters (or their affiliates) of a company that 
would otherwise be a shell company place assets or operations in 
that company and those assets or operations are returned to the 
promoter or its affiliates (or an agreement is made to return those 
assets or operations to the promoter or its affiliates) before, upon 
completion of, or shortly after a business combination transaction 
by that company, those assets or operations would be considered 
``nominal'' for purposes of the definition of shell company.
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4. Definition of ``Business Combination Related Shell Company''
    The definition of ``shell company'' includes a shell company that 
is used to change an entity's domicile and a shell company that is 
formed to effect a business combination transaction. As proposed, a 
shell company formed solely for the purpose of changing the domicile of 
a non-shell entity would have been permitted to use Form S-8 
immediately after it ceased being a shell company and filed required 
information. In this regard, we received comment expressing the view 
that public companies formed to effect mergers, acquisitions, and 
public spin-off transactions also should be permitted to use Form S-8 
within that timeframe.\33\
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    \33\ See letter from Association of the Bar of the City of New 
York.
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    We believe that there is a subset of shell companies for which the 
delay in the use of Form S-8, as well as certain of the reporting 
requirements under Form 8-K and Form 20-F, as discussed below, are not 
necessary. Accordingly, we have defined the term ``business combination 
related shell company'' to identify those entities that we believe fall 
within this subset of shell companies. As adopted today, a ``business 
combination related shell company'' is:
     A shell company formed by an entity that is not a shell 
company solely for the purpose of changing that entity's domicile 
solely within the United States; \34\ or
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    \34\ The language in this definition referring to a shell 
company formed ``solely for the purpose of changing that entity's 
domicile solely within the United States'' is intended to have the 
same meaning as the language ``the sole purpose of the transaction 
is to change an issuer's domicile solely within the United States'' 
in Securities Act Rule 145(a)(2) [17 CFR 230.145(a)(2)].
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     A shell company formed by an entity that is not a shell 
company solely for the purpose of completing a business combination 
transaction among one or more entities other than the shell company, 
none of which is a shell company.\35\
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    \35\ For purposes of this definition, the term ``business 
combination transaction'' will have the same meaning as in 
Securities Act Rule 165(f)(1) [17 CFR 230.165(f)(1)], which defines 
a ``business combination transaction'' as any transaction specified 
in Securities Act Rule 145(a) [17 CFR 230.145(a)] or exchange offer.
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B. Definition of ``Succession''

    We are adopting as proposed the amendment to the definition of the 
term ``succession'' in Exchange Act Rule 12b-2 to include a change in 
control of a shell company that is required to be reported on Form 8-K 
pursuant to Item

[[Page 42237]]

5.01 of that Form or on Form 20-F pursuant to new Exchange Act Rule 
13a-19 or 15d-19. This amendment will, in most cases, require a non-
public acquiring company to succeed to the reporting obligations of a 
shell company and become a reporting company.\36\ For a shell company 
with securities registered under Section 12 of the Exchange Act, this 
will occur because Exchange Act Rule 12g-3 will, with limited 
exceptions, impose Section 12 registration on the securities of the 
acquiror without the necessity of filing an Exchange Act registration 
statement. Similarly, for a shell company with a reporting obligation 
under Section 15(d) of the Exchange Act, the acquiror may be deemed to 
have assumed the reporting obligation of the shell company by operation 
of Exchange Act Rule 15d-5. Because of the interaction of the revised 
definition of ``succession'' and Exchange Act Rules 12g-3 and 15d-5, a 
private entity that acquires a reporting shell company generally will 
report the transaction on Form 8-K, which in this case calls for 
Exchange Act registration-level disclosure, in accordance with the 
requirements of Form 8-K rather than filing an Exchange Act 
registration statement.\37\ We believe this Form 8-K reporting 
requirement provides the appropriate timing, method, and level of 
disclosure to investors.
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    \36\ This definition, along with today's amendments to Form 8-K, 
supersedes the Lisa Roberts, Director of NASDAQ Listing 
Qualifications interpretive letter (Apr. 7, 2000). As explained in 
this interpretive letter, the procedure sometimes called ``back door 
registration'' under the Exchange Act did not, in the Commission 
staff's view at the time, constitute a ``succession'' of the 
surviving entity to the rights and obligations of the reporting 
shell company because the definition of ``succession'' in Exchange 
Act Rule 12b-2 requires that the acquiring company acquire a ``going 
business'' and a shell company was not considered a ``going 
business.'' Nevertheless, the staff permitted non-reporting 
acquiring companies to file Form 8-K reports and enter our reporting 
system, so long as specified information was included, rather than 
requiring these companies to file registration statements under 
Section 12 of the Act on Form 10 or Form 10-SB to become reporting 
companies.
    \37\ Foreign private issuers that do not report on domestic 
issuer forms, such as Form 10-K and Form 10-Q, are not subject to 
this requirement to report the transaction on Form 8-K. Rather, 
foreign private issuers will report the transaction on Form 20-F. 
See the discussion in Section II.E., below, with regard to the 
Exchange Act reporting requirements for a foreign private issuer 
that is a shell company and completes a transaction that causes it 
to cease being a shell company.
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C. Amendments to Securities Act Form S-8

1. Discussion of the Proposal
    We proposed amendments to prohibit the use of Form S-8 by any shell 
company. As proposed, a company that ceased being a shell company would 
become eligible to use Form S-8 to register offerings of securities 60 
calendar days after it filed information equivalent to what it would be 
required to file if it were registering a class of securities under 
Section 12 of the Exchange Act through the use of Form 10, Form 10-SB, 
or Form 20-F, as applicable to that company.\38\ On most occasions, 
this would occur upon the completion of a reverse merger or back door 
registration transaction, and the information would be filed in a 
current report on Form 8-K reporting the transaction that causes the 
company to cease being a shell company. In some circumstances the 
information could be filed in a Form 10, Form 10-SB, or Form 20-F, or 
in a Securities Act registration statement covering the transaction.
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    \38\ The amendments to Form S-8 that we are adopting today will 
apply to foreign private issuers. For a further discussion of the 
application of the Form S-8 amendments to foreign private issuers, 
see the discussion in Section II.E., below.
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    A registration statement on Form 10, Form 10-SB, or Form 20-F 
provides investors with important information about the company in 
which they are considering investing. The 60-day delay between the 
filing of that information and the use of Form S-8 was intended to give 
employees and the markets sufficient time to absorb the information 
provided by the company in its Form 8-K or other filing. The 60-day 
period is consistent with the 60-day period between the filing and 
effectiveness of a company's registration of a class of securities on 
Form 10, Form 10-SB, or Form 20-F under Section 12(g) of the Exchange 
Act.\39\
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    \39\ 15 U.S.C. 78l(g).
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2. Comments on the Proposal
    Most commenters expressed support for our initiative, through the 
Form S-8 proposal, to deter fraud and abuse in our securities markets 
by the use of shell companies. Eight commenters expressed the view that 
shell companies should, at least under certain circumstances, continue 
to be eligible to use Form S-8 for offering securities to officers, 
directors, and employees.\40\ Three commenters proposed permitting a 
shell company to use Form S-8 to register offerings up to a percentage 
of its outstanding public float.\41\ Three commenters agreed that the 
proposed 60-day waiting period should not be shortened.\42\ Another 
commenter expressed the view that we should exclude public companies 
formed to effect mergers, acquisitions, and public spin-off 
transactions, as it is critical that such companies be able to use Form 
S-8 to register offerings of securities under employee benefit plans 
immediately after the closing of such transactions.\43\ This same 
commenter stated that the 60-day waiting period in the Form S-8 
proposal would be an unnecessary restriction on such a successor 
company's ability to sell shares in registered offerings pursuant to 
employee benefit plans.\44\ The commenter proposed that shell companies 
be permitted to use Form S-8 immediately after their conversion to an 
operating company, particularly where another filing has been made that 
meets the disclosure requirements.
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    \40\ See letters from L. Stephen Albright, American Society of 
Corporate Secretaries, David N. Feldman, Conrad C. Lysiak, James B. 
Parsons, John L. Petersen, Jay Sanet, and Michael T. Williams.
    \41\ See letters from James B. Parson, John L. Petersen, and 
Michael T. Williams.
    \42\ See letters from L. Stephen Albright, Jay Sanet, and 
Stoecklein Law Group.
    \43\ See letter from Association of the Bar of the City of New 
York.
    \44\ See id.
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3. Final Rule
    A registration statement on Form S-8 becomes effective upon filing 
with the Commission and does not require a prospectus to be filed as 
part of the registration statement.\45\ Some shell companies seeking to 
distribute their securities and raise capital inappropriately use Form 
S-8. As we discussed in the proposing release, we continue to see the 
misuse of Form S-8 to register the sale of shares to purported 
employees or other nominees, who often are designated as 
``consultants'' but who often do not provide services for which the 
company may offer securities in a transaction registered on Form S-
8.\46\ These schemes lead to unregistered resales of securities into 
the public market by these purported ``employees'' or ``consultants,'' 
denying the protections of the Securities Act to the real public 
purchasers of the company's securities.\47\
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    \45\ See Securities Act Rules 462(a) and 428 [17 CFR 230.462(a) 
and 230.428].
    \46\ General Instruction A.1.(a)(1) to Form S-8 states that the 
form may be used to register securities to be offered and sold to 
consultants only if they are natural persons who provide bona fide 
services to the registrant that ``are not in connection with the 
offer or sale of securities in a capital raising transaction, and do 
not directly or indirectly promote or maintain a market for the 
registrant's securities.''
    \47\ See Release No. 33-7646, Registration of Securities on Form 
S-8 (Feb. 26, 1999) [64 FR 11103].
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    We are adopting the amendments to Form S-8 essentially as proposed, 
as we continue to believe that prohibiting the use of Form S-8 by shell 
companies

[[Page 42238]]

justifies the burdens or costs that might be incurred. Accordingly, an 
entity may use Form S-8 to register offerings of securities pursuant to 
employee benefit plans only if:
     Immediately before the time of filing the registration 
statement, the entity is subject to the requirement to file reports 
pursuant to Section 13 or Section 15(d) of the Exchange Act;
     The entity has filed all reports and other materials 
required to be filed by Section 13 or Section 15(d) of the Exchange Act 
during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports and materials);
     The entity is not a shell company and has not been a shell 
company for at least 60 days before filing the registration statement; 
and
     If the entity has been a shell company at any time, it has 
filed current ``Form 10 information'' with the Commission at least 60 
days previously reflecting its status as an entity that is not a shell 
company.\48\
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    \48\ For purposes of Form S-8, we define the term ``Form 10 
information'' to mean the information that is required by Form 10, 
Form 10-SB, or Form 20-F, as applicable to the registrant, to 
register under the Exchange Act each class of securities being 
registered on the Form S-8.
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    We have included exceptions to the Form S-8 prohibition to permit 
its use by certain shell companies that appear to present less 
potential for abuse. We proposed to permit certain shell companies that 
were used to change corporate domicile to use Form S-8 immediately 
after they cease being shell companies and file ``Form 10 
information.'' We are maintaining this provision. In response to 
comments, we also are permitting certain shell companies that were 
formed solely to effect business combination transactions to use Form 
S-8 immediately after they cease being shell companies and file ``Form 
10 information.'' We have taken two steps to accomplish these 
exceptions. First, we have defined ``business combination related shell 
company,'' as discussed previously, to identify the subset of shell 
companies that qualify for the exception. Second, we are providing in 
Form S-8 that a business combination related shell company may use Form 
S-8 immediately upon ceasing to be a shell company and filing ``Form 10 
information.'' \49\
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    \49\ See new General Instruction A.1.(a)(7) to Form S-8.
---------------------------------------------------------------------------

    We believe the amendments we are adopting today are appropriate, as 
we continue to see misuse of Form S-8 by shell companies and believe 
that prohibiting the use of Form S-8 by shell companies will help to 
deter fraud and abuse. Further, the commenters that indicated that 
shell companies should be eligible to use Form S-8 for offering 
securities to officers, directors, and employees provided only limited 
explanation as to why this practice should continue for all shell 
companies.
    The prohibitions on the use of Form S-8 that we are adopting today 
will not prevent a shell company from registering offers and sales of 
securities pursuant to employee benefit plans under the Securities Act; 
rather, they will require the shell company to register those 
transactions on a registration statement form other than Form S-8. In 
addition, the shell company may be able to offer and sell those 
securities without registration pursuant to an available exemption 
under the Securities Act. We are aware that a different registration 
statement form may not provide the same ease of registration as Form S-
8 and that the resale of securities originally sold in a transaction 
that is exempt from Securities Act registration likely would be treated 
differently under Securities Act Rule 144 \50\ than securities sold to 
employees in a registered transaction. We believe that the benefits of 
this amendment in preventing misuse of Form S-8, deterring fraud, and 
protecting investors substantially justify the potential disadvantages 
for shell companies.
---------------------------------------------------------------------------

    \50\ 17 CFR 230.144.
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D. Exchange Act Form 8-K

1. Discussion of the Proposal
    We proposed amendments to Form 8-K to require a shell company 
(other than a foreign private issuer) to make a more prompt and 
detailed filing upon completion of a transaction otherwise required to 
be reported on that form that causes it to cease being a shell company. 
Specifically, the shell company would have been required to file a 
current report on Form 8-K containing the information that would be 
required in a registration statement on Form 10 or Form 10-SB to 
register a class of securities under Section 12 of the Exchange Act. We 
proposed that a company be required to file this report on Form 8-K 
within four business days after completion of the transaction, 
consistent with the timeframe for most Form 8-K filings.
    We proposed elimination of the additional 71-day ``window'' for 
filing required financial information in a Form 8-K report filed 
pursuant to Item 2.01 of that form.\51\ This window is the period of 
time between the date the registrant files its initial Form 8-K 
reporting the event and the date when the registrant is required to 
file financial information about the transaction. We believed that the 
elimination of the 71-day window would provide investors in operating 
businesses newly merged with shell companies with a level of 
information that is equivalent to the information provided to investors 
in reporting companies that did not originate as shell companies. The 
purpose for requiring this financial information at the time of the 
initial filing of the Form 8-K report was to decrease opportunities to 
engage in fraudulent and manipulative activity during the 71-day window 
period.
---------------------------------------------------------------------------

    \51\ See Item 9.01 of Form 8-K.
---------------------------------------------------------------------------

2. Comments on the Proposal
    The comments responding to the Form 8-K proposal were varied. Four 
commenters expressed concern with the difficulty of preparing the 
required information and completing the filing of the required 
disclosure on Form 8-K within four days.\52\ Three commenters also 
expressed concern over the amount of disclosure that was proposed to be 
included in the Form 8-K.\53\ Each of those commenters believed that 
less information than the information equivalent to that required in a 
Form 10 or Form 10-SB would be adequate. Two of the commenters 
suggested that a level of information similar to that required under 
Exchange Act Schedule 14A \54\ would be adequate,\55\ with the other 
commenter expressing the view that it would be appropriate to require 
only certain of the Form 10 or Form 10-SB information.\56\ Two 
commenters suggested that the shell company be permitted to delay 
filing its required disclosure if there was no trading in its 
securities.\57\ One of these commenters suggested retaining the 71-day 
window, but limiting the trading in the shell company's securities by 
specified persons during that window.\58\
    Eight commenters supported the adoption of the Form 8-K proposal to 
provide information to investors and deter fraud and abuse by shell 
companies.\59\ The commenters

[[Page 42239]]

supported the proposed rulemaking as an opportunity for the Commission 
to provide a disincentive for shell company abuse. Four commenters 
supported closing the 71-day window, on the grounds that this would 
deter fraud and abuse.\60\ Two of these commenters suggested that the 
Commission consider a compromise of between 15 and 45 days.\61\ One of 
these commenters stated that the financial statements are ``vital to an 
understanding'' of the transaction and that the closing of the merger 
transaction should be delayed until such time as the financial 
statements are properly prepared.\62\
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    \52\ See letters from L. Stephen Albright, David N. Feldman, 
Mike Liles, Jr., and James B. Parsons.
    \53\ See letters from L. Stephen Albright, David N. Feldman, and 
James M. Schneider.
    \54\ 17 CFR 240.14a-101.
    \55\ See letters from L. Stephen Albright and James M. 
Schneider.
    \56\ See letter from David N. Feldman.
    \57\ See letters from David N. Feldman and Mike Liles, Jr.
    \58\ See letter from Mike Liles, Jr.
    \59\ See letters from L. Stephen Albright, Nathan Garnett, Simon 
M. Lorne, North American Securities Administrators Association, 
Inc., James B. Parsons, John Peterson, Stoecklein Law Group, and 
Michael T. Williams.
    \60\ See letters from L. Stephen Albright, James B. Parsons, 
North American Securities Administrators Association, Inc., and 
Stoecklein Law Group.
    \61\ See letters from L. Stephen Albright and James B. Parsons.
    \62\ See letter from Stoecklein Law Group.
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3. Final Rule
    We are adopting the Form 8-K amendments substantially as proposed. 
The amendments to Form 8-K will require the surviving entity \63\ in a 
transaction where a shell company ceases being a shell company to make 
a more specific and detailed filing upon completion of such a 
transaction that is required to be reported on that form.\64\ These 
transactions will fall within the requirements of either or both of 
Item 2.01 and Item 5.01 of Form 8-K.\65\ Upon completion of this type 
of transaction, the surviving entity will be required to file a current 
report on Form 8-K containing the information, including financial 
information, that would be required in a registration statement on Form 
10 or Form 10-SB to register a class of securities under Section 12 of 
the Exchange Act, with that information reflecting the surviving entity 
and its securities upon consummation of the transaction.\66\
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    \63\ If a class of securities of an issuer succeeds, by 
operation of Exchange Act Rule 12g-3, to the registration under 
Exchange Act Section 12 of a class of the shell company's 
securities, thus causing that successor issuer to succeed to the 
registrant's reporting obligation under Exchange Act Section 13, or 
if an issuer succeeds, by operation of Exchange Act Rule 15d-5, to 
the shell company's reporting obligation under Exchange Act Section 
15(d), the successor issuer will then succeed to the shell company's 
obligation to file the required information in a report on Form 8-K. 
If neither of the events described in the previous sentence occur, 
the shell company will be obligated to file the required information 
in a report on Form 8-K. For ease of discussion in this section, we 
refer to the entity that is obligated to file the required 
information in a report on Form 8-K as the ``surviving entity.'' In 
the back door registration context, the surviving entity's 
securities must meet all of the conditions of Exchange Act Rule 12g-
3 for those securities to be deemed registered under the same 
paragraph of Exchange Act Section 12 under which the shell company's 
securities were registered. For example, if the number of record 
holders of the surviving entity's securities is less than 300, the 
securities of the surviving entity will not succeed automatically by 
operation of Exchange Act Rule 12g-3 to the reporting status of the 
shell company's securities. Instead, the surviving entity would be 
required to file a Form 10 or 10-SB if it wishes to register the 
securities under Exchange Act Section 12. Similarly, under Exchange 
Act Rule 15d-5, the surviving entity will be considered the 
successor issuer by operation of Exchange Act Rule 15d-5 unless the 
surviving entity is exempt from filing reports or the duty to file 
reports is suspended under Section 15(d) of the Exchange Act.
    \64\ In most cases, this will occur when the shell company 
acquires or is acquired by an operating business. Under the 
definition of ``shell company'' we are adopting today, it also could 
occur when the shell company acquires more than nominal assets 
(other than cash or cash equivalents). Requiring prompt and detailed 
disclosure in a Form 8-K filing will provide investors in operating 
businesses newly merged with shell companies with a level of 
information that is equivalent to the information provided to 
investors in reporting companies that did not originate as shell 
companies.
    \65\ Where an operating company acquires a shell company and the 
operating company survives the transaction, the operating company 
will have acquired control of the shell for purposes of the 
definition of ``succession'' under amended Exchange Act Rule 12b-2. 
The operating company, as the surviving entity, will be required to 
file a Form 8-K under Item 5.01. The transaction will constitute a 
change in control of the shell company whether or not shareholders 
of the operating company before the transaction control the 
surviving entity following the transaction.
    \66\ That Form 8-K need not, however, contain registration-level 
information if that information previously has been included in an 
effective registration statement under the Securities Act. In that 
instance, the Form 8-K could merely reference the Securities Act 
registration statement that contains the required information. This 
same principle will apply to information that previously was 
included in a filing under the Exchange Act. We have amended Form 8-
K to make this clear.
---------------------------------------------------------------------------

    We are requiring that the surviving entity file its report on Form 
8-K within four business days after completion of the transaction that 
it is required to report. While we understand the concerns of 
commenters regarding this timeframe, we believe the timeframe is 
appropriate because shell companies and their counsel control the pace 
and timing of these transactions. Given the concerns unique to shell 
company transactions, we believe shell companies should complete a 
transaction that is required to be reported only when they can timely 
provide investors with adequate information to make informed investment 
decisions.\67\ Moreover, obtaining audited financial statements for the 
operating business in such a transaction should not present the 
difficulties that caused us to provide the extended filing window for 
business combinations involving reporting companies with 
operations.\68\
---------------------------------------------------------------------------

    \67\ As suggested by commenters, we considered imposing a 
trading ban on the securities of shell companies that have ceased 
being shell companies and have not filed the required financial 
statements, with the trading ban imposed until the converted shell 
company files its audited financial statements. We have not included 
such a provision in the final rule, as we believe that the 
information required in the Form 8-K will have the same effect of 
informing the market before trading and will not present the 
practical implementation issues that would be presented by a trading 
ban.
    \68\ See Release No. 33-6578, Business Combination Transactions; 
Adoption of Registration Form (Apr. 23, 1985) [50 FR 18990].
---------------------------------------------------------------------------

    We believe that prompt and proper disclosure of Exchange Act 
registration-level information at the time of shell company 
transactions will deter abuse and provide investors with information 
necessary for their investment decisions. Accordingly, we believe it is 
appropriate to require Form 10 or Form 10-SB information, as 
applicable, in the Form 8-K. This level of disclosure will provide 
investors in operating businesses newly merged with shell companies 
with prompt and detailed disclosure that is equivalent to the 
information provided to investors in reporting companies that register 
under the Exchange Act rather than reaching the same result through a 
transaction with a reporting shell company.
    We are adding new Item 5.06 to Form 8-K.\69\ New Item 5.06 will 
require a shell company that completes a transaction in which it ceases 
being a shell company to file a report under that Item reporting the 
material terms of the transaction. If the shell company is not the 
surviving entity in the transaction in which it ceases to be a shell 
company, the surviving entity would succeed to the shell company's 
obligation to comply with Item 5.06.\70\ New Item 5.06 will allow 
market participants and regulators to more easily identify Form 8-K 
filings regarding shell company transactions and to more completely 
understand the terms of those transactions.
---------------------------------------------------------------------------

    \69\ Foreign private issuers generally are not required to file 
reports on Form 8-K. See Exchange Act Rule 13a-11(b) [17 CFR 
240.13a-11(b)] and Exchange Act Rule 15d-11(b) [17 CFR 240.15d-
11(b)]. Accordingly, we have not extended the requirements of Item 
5.06 to foreign private issuers. For a discussion of the reporting 
requirements of foreign private issuers, see Section II.E., below.
    \70\ The surviving entity in a transaction where a shell company 
ceases being a shell company most likely will have to comply with 
other Items of Form 8-K, as discussed above, in addition to Item 
5.06. The registrant could file a single Form 8-K responding to all 
applicable Items.
---------------------------------------------------------------------------

    Business combination related shell companies will not be subject to 
the requirements of Item 5.06. We believe this will enhance the use of 
Item 5.06 as a means by which market participants and regulators may 
identify filings on Form 8-K relating to shell company transactions 
that are not change in domicile transactions or

[[Page 42240]]

business combination transactions among non-shell companies.
    We solicited comment as to whether we should take steps to make 
shell company transactions more easily identifiable. One commenter 
responded to this request.\71\ That commenter supported improved 
identification of shell company transactions and expressed the view 
that it would be beneficial to ``establish a mechanism that identifies 
those reporting companies that fall into the definition of shell 
company * * *'' \72\ Because companies other than shell companies may 
file reports on Form 8-K under Item 2.01 or Item 5.01, we believe that 
it is appropriate to add an Item requirement to Form 8-K that is 
specific to shell companies other than business combination related 
shell companies.
---------------------------------------------------------------------------

    \71\ See letter from North American Securities Administrators 
Association, Inc.
    \72\ See id.
---------------------------------------------------------------------------

E. Shell Companies That Are Foreign Private Issuers

1. Form S-8
    Some foreign private issuers that are registered with the 
Commission may fall within the definition of shell company that we are 
adopting today. A shell company that is a foreign private issuer is 
subject to the new rules regarding the use of Form S-8. We proposed 
that, as with a domestic shell company, a foreign private issuer shell 
company would be ineligible to file a registration statement on Form S-
8 until 60 days after ceasing to be a shell company and filing the 
``Form 10 information'' that the issuer would file if that issuer were 
registering a class of securities under the Exchange Act. For a foreign 
private issuer, the proposal defined ``Form 10 information'' to mean 
the information required by Form 20-F to register the class of 
securities under the Exchange Act.
    We did not receive comments on the proposed amendments to Form S-8 
as they relate to foreign private issuers. For purposes of Form S-8, we 
are adopting the definition of ``Form 10 information,'' when applicable 
to foreign private issuers, to mean information required by Form 20-
F.\73\
---------------------------------------------------------------------------

    \73\ As with domestic issuers, the amendment to Form S-8 makes 
clear that this ``Form 10 information'' of the foreign private 
issuer may be included in any filing with the Commission.
---------------------------------------------------------------------------

2. Exchange Act Reporting of Transactions That Cause a Foreign Private 
Issuer To Cease Being a Shell Company
    Unlike domestic issuers, foreign private issuers that are subject 
to the periodic reporting requirements under the Exchange Act generally 
are not required to file current reports on Form 8-K.\74\ Instead, 
these issuers submit material current information on Form 6-K.\75\ In 
the proposing release, we requested comment on alternative approaches 
with respect to disclosure requirements for foreign private issuer 
shell companies, including the appropriate form on which they should 
disclose a transaction with an operating business. We did not receive 
comments in response to this request.
---------------------------------------------------------------------------

    \74\ See Exchange Act Rules 13a-11(b) and 15d-11(b). A foreign 
private issuer shell company that engages in a transaction that 
causes it to lose its status as a foreign private issuer at the same 
time it ceases to be a shell company would have to comply with the 
requirements of Form 8-K that are applicable to domestic companies.
    \75\ 17 CFR 249.306. See Exchange Act Rule 13a-16 [17 CFR 
240.13a-16] and Exchange Act Rule 15d-16 [17 CFR 240.15d-16].
---------------------------------------------------------------------------

    While we believe that foreign private issuer shell companies should 
be subject to the disclosure and timing requirements of the rules 
relating to shell companies, we believe those issuers should report on 
Form 20-F rather than Form 8-K. Accordingly, we are adopting new 
Exchange Act Rules 13a-19 and 15d-19. Under these new rules, a foreign 
private issuer that was a shell company immediately before entering 
into a transaction that causes it to cease being a shell company must 
report that transaction on a current basis on Form 20-F.\76\ That 
report must contain the same information that would be required in a 
registration statement on Form 20-F used to register the classes of the 
foreign private issuer's securities that are subject to the reporting 
requirements of Section 13 or Section 15(d) of the Exchange Act, and 
must be filed within four business days of the completion of the 
transaction being reported.\77\ Because we believe that better 
identification of shell company transactions is a key element in 
deterring fraud, we are adding a check box to the cover page of Form 
20-F that a foreign private issuer must mark when filing a Form 20-F 
under Exchange Act Rule 13a-19 or Rule 15d-19.\78\ For the same reasons 
discussed above regarding the application of Item 5.06 of Form 8-K, we 
are not extending the requirements of Exchange Act Rule 13a-19 or Rule 
15d-19 to foreign private issuers that are business combination related 
shell companies.
---------------------------------------------------------------------------

    \76\ Foreign private issuers that have elected to report on 
domestic issuer forms, such as Form 10-K and Form 10-Q, should file 
the required information on Form 8-K and not Form 20-F.
    \77\ See the discussion in footnotes 18, 63, and 70 regarding 
the reporting obligation of successor issuers.
    \78\ As with the periodic report forms for shell companies that 
are not foreign private issuers, we also have included a check box 
on the cover of Form 20-F that requires a foreign private issuer to 
indicate, in any annual report on that form, that it is a shell 
company. The new check box indicates that it is required where the 
report on Form 20-F is an ``annual report.'' This requirement would 
include any transition reports on that Form. In this regard, see the 
discussion in Section II.F., below.
---------------------------------------------------------------------------

    Exchange Act Rule 12b-25 permits a foreign private issuer, subject 
to certain conditions, to extend the due date of its filing of an 
annual or transition report on Form 20-F.\79\ Exchange Act Rule 12b-25 
does not provide an extension of the due date for filing a current 
report on Form 8-K. As the reports on Form 20-F that are to be filed 
under Exchange Act Rule 13a-19 or Rule 15d-19 are neither annual 
reports nor transition reports, Exchange Act Rule 12b-25 does not 
provide an extension of the due date for their filing. Because the 
reports on Form 20-F that are to be filed under Exchange Act Rule 13a-
19 or Rule 15d-19 are more in the nature of a current report, we 
believe that the extension permitted under Exchange Act Rule 12b-25 
should not be available to those Form 20-F reports and we have not 
added language to Exchange Act Rule 12b-25 to provide such an 
extension.\80\
---------------------------------------------------------------------------

    \79\ 17 CFR 240.12b-25.
    \80\ We have included language in Form 20-F to make clear that 
Exchange Act Rule 12b-25 does not apply to reports required to be 
filed on that form under new Exchange Act Rule 13a-19 or new 
Exchange Act Rule 15d-19.
---------------------------------------------------------------------------

    Exchange Act Rules 13a-14(a) and 15d-14(a) currently require, among 
other things, that ``each report'' on Form 20-F must include, as an 
exhibit, specified certifications of the foreign private issuer's 
principal executive and principal financial officers. Form 20-F is a 
multi-function form that may be used as a registration statement or a 
report. We believe that a Form 20-F required to be filed under new 
Exchange Act Rule 13a-19 or new Exchange Act Rule 15d-19 is more 
similar to a registration statement on that Form than a report on that 
Form, and that the information is being provided on a current basis in 
a manner similar to that required by Form 8-K. As such, we have added 
language to Exchange Act Rules 13a-14(a) and 15d-14(a) excluding from 
the requirements of those paragraphs reports that are filed on Form 20-
F under either new Exchange Act Rule 13a-19 or new Exchange Act Rule 
15d-19.

F. Shell Company Check Box on Exchange Act Reports

    In the proposing release, we asked specifically for comment on 
whether we should make reports on Form 8-K reporting shell company 
transactions

[[Page 42241]]

easier for market participants and regulators to identify. In response 
to this request, one commenter indicated that rulemaking to accomplish 
this purpose would be appropriate.\81\ That commenter also expressed 
the view that the cover page of periodic report forms should include a 
means, such as a check box, by which filers would be required to 
identify themselves as shell companies.\82\ We believe better 
identification of shell companies and shell company transactions is a 
key element to deterring fraud. Accordingly, we are adopting amendments 
to Form 10-Q, Form 10-QSB, Form 10-K, Form 10-KSB, and Form 20-F to add 
a box on the cover page of those forms that the registrant must mark to 
indicate whether or not it is a ``shell company.'' \83\ The 
identification of shell company or non-shell company status on the 
cover page of these forms will constitute required disclosure that is 
subject to all applicable federal securities laws.
---------------------------------------------------------------------------

    \81\ See letter from North American Securities Administrators 
Association, Inc.
    \82\ See id.
    \83\ Further, as discussed above, we have added new Item 5.06 to 
Form 8-K to allow market participants and regulators to identify 
transactions by shell companies, other than business combination 
related shell companies.
---------------------------------------------------------------------------

III. Paperwork Reduction Act

    The amendments affect Securities Act Form S-8, Form SB-2, Form S-1, 
and Form F-1 and Exchange Act Form 8-K, Form 10-Q, Form 10-QSB, Form 
10-K, Form 10-KSB, and Form 20-F, which contain ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act of 1995.\84\ In the proposing release, we requested 
comments on the proposed changes to these collection of information 
requirements,\85\ and the Office of Management and Budget (``OMB'') has 
approved the changes. The titles of the affected collections of 
information requirements are: Form S-8 (OMB Control No. 3235-0066), 
Form SB-2 (OMB Control No. 3235-0418), Form S-1 (OMB Control No. 3235-
0065), Form F-1 (OMB Control No. 3235-0258), Form 8-K (OMB Control No. 
3235-0060), Form 10-Q (OMB Control No. 3235-0070), Form 10-QSB (OMB 
Control No. 3235-0416), Form 10-K (OMB Control No. 3235-0063), Form 10-
KSB (OMB Control No. 3235-0420), and Form 20-F (OMB Control No. 3235-
0288). An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information requirement unless 
it displays a currently valid control number.
---------------------------------------------------------------------------

    \84\ 44 U.S.C. 3501 et seq.
    \85\ Release No. 33-8407, Use of Form S-8 and Form 8-K by Shell 
Companies (Apr. 15, 2004) [69 FR 21650].
---------------------------------------------------------------------------

A. Summary of Amendments

    We are adopting rules and rule amendments relating to filings by 
reporting shell companies. Under the new rules, we define a ``shell 
company'' as a registrant (other than an asset-backed issuer) with no 
or nominal operations and either no or nominal assets, assets 
consisting solely of cash and cash equivalents, or assets consisting of 
any amount of cash and cash equivalents and nominal other assets. We 
also prohibit the use of Form S-8 by shell companies. We are amending 
Form 8-K to require a shell company, when reporting an event that 
causes it to cease being a shell company, to file with the Commission 
the same type of information that it would be required to file to 
register a class of securities under the Exchange Act. In addition, we 
are amending Form 8-K to add new Item 5.06. Item 5.06 will require a 
registrant that is a shell company (other than a business combination 
related shell company) to report under that Item when it ceases being a 
shell company. We are adding new Exchange Act Rules 13a-19 and 15d-19 
to require disclosure on Form 20-F when a foreign private issuer that 
is a shell company (other than a business combination related shell 
company) completes a transaction that causes it to cease to be a shell 
company.\86\ Finally, we are adding check boxes to the cover pages of 
Form 10-Q, Form 10-QSB, Form 10-K, Form 10-KSB, and Form 20-F for the 
registrant to identify itself as a shell company.
---------------------------------------------------------------------------

    \86\ We believe that a foreign private issuer shell company 
merging with a domestic operating business rarely will be able to 
keep its foreign private issuer status. We do not expect the number 
of these transactions to have any quantifiable effect on the 
estimates included in this section.
---------------------------------------------------------------------------

    These amendments are intended to protect investors by deterring 
fraud and abuse in our public securities markets through the use of 
shell companies. Compliance with the amended disclosure requirements is 
mandatory. There is no mandatory retention period for the information 
disclosed and responses to the disclosure requirements will not be kept 
confidential.

B. Summary of Comment Letters and Revisions to Proposals

    We requested comment on the PRA analysis contained in the proposing 
release. Two commenters stated their belief that the proposed 
amendments would increase costs to shell companies,\87\ but a third 
commenter stated that the proposed amendments to Form 8-K would not 
increase costs.\88\
---------------------------------------------------------------------------

    \87\ See letters from L. Stephen Albright and Stoecklein Law 
Group.
    \88\ See letter from Nathan Garnett.
---------------------------------------------------------------------------

    One of these commenters indicated that the acceleration of work by 
legal and accounting professionals would substantially increase costs, 
but did not clearly explain why acceleration of the work would have 
this effect.\89\ Another commenter expressed the view that the Form 8-K 
cost burden estimate was too low.\90\ This commenter stated that, in 
its experience, outside counsel performs 75% of the work to complete a 
Form 8-K report, not the 25% estimate in the proposing release.\91\ 
This commenter estimated that the Form 8-K cost burden would triple but 
did not believe that the higher cost burden would create an unnecessary 
obstacle to legitimate transactions.\92\ This commenter did not provide 
evidence to suggest that its estimates would apply to all shell 
companies. Our estimates of the average number of hours each entity 
spends completing the affected forms, allocation of burden between 
outside counsel and internal personnel, and the average hourly rate for 
outside securities counsel were obtained by contacting a number of law 
firms and other persons regularly involved in completing the forms. 
Therefore, we are not modifying the proposed cost burden estimate for 
Form 8-K.
---------------------------------------------------------------------------

    \89\ See letter from L. Stephen Albright.
    \90\ See letter from Stoecklein Law Group.
    \91\ See id.
    \92\ See id.
---------------------------------------------------------------------------

C. Form S-8

    The amendment prohibiting shell companies from using Securities Act 
Form S-8 will require these companies to use a less streamlined form, 
such as Form SB-2, Form S-1, or Form F-1 to register offerings that 
they otherwise might have registered on Form S-8. A company that ceases 
to be a shell company will be eligible to file a Form S-8 registration 
statement 60 days after it ceases to be a shell company and files 
information equivalent to the information that it would be required to 
file if the company were registering a class of securities under the 
Exchange Act. In the proposing release, we estimated that this change 
would reduce the number of Form S-8 registration statements by 
approximately 5%, and would increase the number of Form SB-2 and Form 
S-1 registration statements filed by a corresponding amount. We 
received no comments on these estimates. With respect to Form S-8, we 
estimate that 50% of the burden of

[[Page 42242]]

preparing the form is borne by the company's internal staff and that 
the other 50% represents work performed by outside securities counsel 
retained by the company at an average rate of $300 per hour. With 
respect to Form SB-2, Form S-1, and Form F-1, we estimate that 25% of 
the burden of preparing the form is borne by the company's internal 
staff and that 75% of the burden represents work performed by outside 
securities counsel at the rate of $300 per hour.
    We do not expect that shell companies that are prohibited from 
using Form S-8 are likely to register securities that they otherwise 
would have registered on Form S-8 on a registration form that does not 
become effective automatically and requires the filing of substantially 
more complete information. However, shell companies that wish to 
register offerings of their securities under the Securities Act could 
instead file on Form SB-2, Form S-1, or Form F-1. We estimate that a 
maximum of 5% of the number of Form S-8 registration statements filed 
in our fiscal year 2004 (4,000 x .05 = 200 filings) will be filed on 
Form SB-2, Form S-1, or Form F-1 instead. We also expect 95% of these 
200 filings by shell companies that choose to file another registration 
statement in lieu of Form S-8 will use Form SB-2, thereby increasing 
the number of Form SB-2 filings by 190 (200 filings x .95). We further 
estimate that the number of Form S-1 registration statements will 
increase by 8 (200 filings x .04). We estimate that the number of Form 
F-1 registration statements will increase by 2 (200 filings x .01). As 
a result, we estimate that the Form S-8 reporting burden will decrease 
by 2,400 hours (200 filings x 24 hours per filing x .50) and the annual 
cost will decrease by $720,000 (200 filings x 24 hours per filing x 
$300 per hour x .50). The Form SB-2 reporting burden will increase by 
28,168 hours (190 filings x 593 hours per filing x .25), with an annual 
cost increase of $25,350,750 (190 filings x 593 hours per filing x $300 
per hour x .75). We estimate that the Form S-1 reporting burden will 
increase by 2,204 hours (8 filings x 1,102 hours per filing x .25) with 
an annual cost increase of $1,983,600 (8 filings x 1,102 hours per 
filing x $300 per hour x .75). Finally, we estimate that the Form F-1 
reporting burden will increase by 905 hours (2 filings x 1,809 hours 
per filing x .25) with an annual cost increase of $814,050 (2 filings x 
1,809 hours per filing x $300 per hour x .75).

D. Form 8-K

    Form 8-K prescribes information about important corporate events 
that a company must disclose on a current basis. Form 8-K also may be 
used, at a company's option, to report any event that the company deems 
to be of importance to its shareholders.
    We currently estimate that Form 8-K results in a total annual 
compliance burden of 311,565 hours and an annual cost of $31,156,500. 
We estimate the number of Form 8-K filers to be approximately 12,000, 
based on the actual number of Form 10-K and Form 10-KSB filers during 
the Commission's 2004 fiscal year. For purposes of this analysis, we 
estimate that the number of reports on Form 8-K filed annually is 
83,084. We estimate that each entity currently spends, on average, 
approximately five hours to complete Form 8-K. We estimate that 75% of 
the burden is borne by the company and that 25% of the burden is borne 
by outside securities counsel retained by the company at an average 
cost of $300 per hour.
    We are amending Form 8-K to add Item 5.06, which will require a 
registrant that is a shell company (other than a business combination 
related shell company) that engages in a transaction that changes its 
status as a shell company to file a report on Form 8-K. As noted below, 
we estimate that 94 of these transactions occurred in fiscal year 2004. 
All of these 94 transactions would be required to be reported pursuant 
to Item 5.06 of Form 8-K. Because each of these transactions already 
would have been required to be reported on Form 8-K pursuant to Item 
2.01 or Item 5.01 of that Form, we do not believe that Item 5.06 will 
add additional burdens or costs.
    Under the revisions to Item 2.01 and Item 5.01 of Form 8-K that we 
are adopting today, a shell company will be required to make a more 
specific and detailed filing on Form 8-K when it reports a transaction 
that causes it to cease being a shell company. Specifically, the shell 
company will need to file a Form 8-K that contains the information that 
would be required in an initial registration statement on Form 10 or 
Form 10-SB to register a class of securities under Section 12 of the 
Exchange Act. The company will be required to file the Form 8-K within 
four business days after the closing of the transaction. This amendment 
will eliminate the 71-day window during which financial information 
required to be included in the report can be filed by a shell company 
currently.
    The amendments to Item 2.01 and Item 5.01 will increase the amount 
of information that a former shell company must include in the form, 
but not the number of filings. In our fiscal year 2004, companies that 
categorized themselves as ``blank check companies'' using the relevant 
SEC Standard Industrial Classification (SIC) Code disclosed 31 
transactions under Item 2.01 of Form 8-K. We also have identified 63 
back door registration filings during fiscal year 2004 that would be 
required to be filed on an expanded Form 8-K under the new 
requirements. We believe the combined total of 94 of these filings is a 
proper estimate of the total number of Item 2.01 and Item 5.01 filings 
and have used that number of filings for purposes of this analysis.
    We believe that the additional information we are requiring shell 
companies to include in a Form 8-K filed under Item 2.01 or Item 5.01 
of Form 8-K is analogous to information required by Form 10-SB because 
the substantial majority of shell companies will be small business 
issuers. Currently, we estimate that it takes 133 hours to complete a 
Form 10-SB. Therefore, we estimate that it will take a shell company 
133 hours to prepare the information that we are requiring the company 
to provide in a Form 8-K report when it reports a transaction that 
causes it to cease being a shell company. We estimate that the company 
will bear 75% of the burden and that 25% of the burden will be borne by 
outside securities counsel retained by the company at an average rate 
of $300 per hour. We estimate that the burden in this type of Form 8-K 
filing will increase by 12,502 hours (133 hours per filing x 94 
required filings). Therefore, the annual Form 8-K reporting burden will 
increase by 9,377 hours (12,502 total hours x .75) and the annual cost 
burden will increase by approximately $937,650 (12,502 total hours x 
$300 per hour x .25).
    We are adopting several modifications to our proposals, but none of 
these affects our burden estimates associated with the amendments. One 
modification is that a registrant will be required to check a box on 
its Form 10-Q, Form 10-QSB, Form 10-K, Form 10-KSB, or Form 20-F 
indicating whether or not it is a shell company as defined in Rule 12b-
2 under the Exchange Act. We believe that this and other changes that 
we have made to the proposals do not affect the total amount of burden 
hours or costs imposed by the forms.

[[Page 42243]]

E. Form 20-F

    The amendments to Form 20-F require a foreign private issuer that 
is a shell company to file a report on Form 20-F after completion of a 
transaction that causes it to cease being a shell company. The Form 20-
F is a multi-function form used by foreign private issuers.
    We estimate that there were 1,240 foreign private issuers that were 
registered and reporting with the Commission as of December 31, 
2004.\93\ We estimate that each entity currently spends, on average, 
approximately 2,615 hours to complete Form 20-F (3,242,600 total hours 
/ 1,240 filings = 2,615 hours per filing). We estimate that 25% of the 
burden is borne by the company and that 75% of the burden is borne by 
outside securities counsel retained by the company at an average cost 
of $300 per hour.
---------------------------------------------------------------------------

    \93\ See SEC Web site at http://www.sec.gov/divisions/corpfin/internatl/companies.shtml.
---------------------------------------------------------------------------

    We estimate that Form 20-F results in a total annual compliance 
burden of 810,650 hours (2,615 hours per filing x 1,240 filings x .25) 
and an annual cost of $729,585,000 (2,615 hours x 1,240 filings x $300 
x .75%). As we discuss above, we have estimated that there will be 94 
shell company transactions reported annually on Form 8-K. As 
approximately 10% of reporting companies are foreign private issuers, 
we estimate that foreign private issuer shell companies will file 10 
reports on Form 20-F (94 filings x .10). As a result, we estimate that 
the Form 20-F reporting burden will increase by 6,538 hours (10 filings 
x 2,615 hours per filing x .25), with an annual cost increase of 
$5,883,750 (10 filings x 2,615 hours per filing x $300 per hour x 
.75).\94\
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    \94\ The estimate of 2,615 hours per filing for Form 20-F 
reflects the fact that the form is used by foreign private issuers, 
regardless of the size of the issuer. In estimating the increased 
annual burden and cost, we have continued to use this estimate of 
2,615 hours per filing, even though it is likely an overstatement of 
the time necessary for a shell company to complete the form, because 
we do not have a better estimate of the amount of time a smaller, 
less complex foreign private issuer would require to complete the 
form.
---------------------------------------------------------------------------

IV. Costs and Benefits

    Today's amendments are intended to protect investors by deterring 
fraud and abuse in our securities markets through the use of reporting 
shell companies. However, we are sensitive to the costs and benefits 
that result from our rules. In this section, we examine the costs and 
benefits of the amendments.

A. Form S-8

1. Costs of Form S-8 Amendments
    A shell company no longer will be eligible to use Form S-8 to 
register offerings of securities in connection with employee benefit 
plans. We believe it generally is inconsistent with shell company 
status to have a legitimate use for employee benefit plans. However, 
where such a plan exists, a shell company will continue to be eligible 
to use Form SB-2, Form S-1, or Form F-1 to offer securities in 
connection with an employee benefit plan. A shell company also may be 
entitled to rely on certain exemptions from the registration 
requirements of the Securities Act. Thus, shell companies will continue 
to be able to offer securities under employee benefit plans. They 
cannot, however, take advantage of Form S-8, which is a streamlined 
registration statement form with automatic effectiveness. Moreover, the 
securities that are offered and sold in reliance on an exemption from 
Securities Act registration may be subject to restrictions on resale. 
This may impose costs on shell companies that are difficult to 
quantify.
    We estimate that the cost of shell companies no longer being 
eligible to use Form S-8 in connection with employee benefit plans is 
the difference between the cost of 200 Form S-8 filings and the cost of 
filing those 200 registration statements on Form SB-2, Form S-1, or 
Form F-1. Based on the estimates presented above, these amounts are:
     Cost of increasing the number of Form SB-2 filings by 190 
= $30,280,063; \95\ plus
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    \95\ We have estimated the company's internal costs at $175 per 
hour. Accordingly, we have calculated the cost of the increased 
burden that is borne by the registrant by multiplying the total 
number of hours for the 190 filings (190 filings x 593 hours per 
filing x $175 per hour x .25 = $4,929,313). We have then added this 
amount to the $25,350,750 cost to the company (190 filings x 593 
hours per filing x $300 x .75).
---------------------------------------------------------------------------

     Cost of increasing the number of Form S-1 filings by 8 = 
$2,369,300 \96\ plus
---------------------------------------------------------------------------

    \96\ We have estimated the company's internal costs at $175 per 
hour. Accordingly, we have calculated the cost of the increased 
burden that is borne by the registrant by multiplying the total 
number of hours for the 8 filings (8 filings x 1,102 hours per 
filing x $175 per hour x .25 = $385,700). We have then added this 
amount to the $1,983,600 cost to the company (8 filings x 1,102 
hours per filing x $300 x .75).
---------------------------------------------------------------------------

     Cost of increasing the number of Form F-1 filings by 2 = 
$972,338 \97\ minus
---------------------------------------------------------------------------

    \97\ We have estimated the company's internal costs at $175 per 
hour. Accordingly, we have calculated the cost of the increased 
burden that is borne by the registrant by multiplying the total 
number of hours for the 2 filings (2 filings x 1,809 hours per 
filing x $175 per hour x .25 = $158,288). We have then added this 
amount to the $814,050 cost to the company (2 filings x 1,809 hours 
per filing x $300 x .75).
---------------------------------------------------------------------------

     Decreased cost from decreasing the number of Form S-8 
filings by 200 = $1,140,000 \98\ equals
---------------------------------------------------------------------------

    \98\ We have estimated the company's internal costs at $175 per 
hour. Accordingly, we have calculated the cost of the decreased 
burden that is borne by the registrant by multiplying the total 
number of hours for the 200 filings (200 filings x 24 hours per 
filing x $175 per hour x .50 = $420,000). We have then added this 
amount to the $720,000 decreased cost to the company (200 filings x 
24 hours per filing x $300 x .50).
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     Total cost of amendments to Form S-8 = $32,481,701
2. Benefits of Form S-8 Amendments
    Shell companies often have used offerings registered on Form S-8 
for fraudulent and manipulative purposes. These amendments disqualify 
shell companies from using Form S-8. The amendments also require a 
shell company (other than a business combination related shell company) 
that ceases to be a shell company to wait 60 days after it ceases to be 
a shell company and files information that is equivalent to the 
information contained in an Exchange Act registration statement before 
it becomes eligible to use Form S-8. This amendment will make it more 
difficult for shell companies to use Form S-8 for fraudulent purposes, 
and is consistent with the full disclosure purpose of the federal 
securities laws.

B. Form 8-K

1. Costs of Form 8-K Amendments
a. New Item 5.06 of Form 8-K
    We are amending Form 8-K to add Item 5.06, which will require a 
registrant that is a shell company (other than a business combination 
related shell company) that engages in a transaction that changes its 
status as a shell company to file a report on Form 8-K. As noted above, 
we estimate that 94 of these transactions occurred in fiscal year 2004. 
All of these 94 transactions would be required to be reported pursuant 
to Item 5.06 of Form 8-K. Because each of these transactions already 
would have been required to be reported on Form 8-K pursuant to Item 
2.01 or Item 5.01 of that Form, we do not believe that Item 5.06 will 
add measurable additional costs.
b. Revised Items 2.01 and 5.01 of Form 8-K
    We are revising Item 2.01 and Item 5.01 of Form 8-K. Under these 
revisions, a shell company will be required to make a more specific and

[[Page 42244]]

detailed filing on Form 8-K when it reports a transaction that causes 
it to cease being a shell company. Specifically, the shell company will 
need to file a Form 8-K that contains the information that would be 
required in an initial registration statement on Form 10 or Form 10-SB 
to register a class of securities under Section 12 of the Exchange Act. 
The company will be required to file the Form 8-K within four business 
days after the closing of the transaction. This amendment also will 
eliminate the current 71-day window during which the financial 
information can be filed by a shell company that is filing a report on 
Form 8-K pursuant to Item 2.01.\99\
---------------------------------------------------------------------------

    \99\ Because this revision will affect only the timing of filing 
and not the amount of financial information required to be filed, we 
do not estimate any additional costs as a result of the elimination 
of the 71-day window.
---------------------------------------------------------------------------

    The amendments to Item 2.01 and Item 5.01 will increase the amount 
of information that a former shell company must include in the form but 
not the number of filings. As discussed above, we have estimated that 
there will be 94 filings subject to these new requirements.
    We believe that the additional information we are requiring shell 
companies to include in a Form 8-K filed under Item 2.01 or Item 5.01 
of Form 8-K is analogous to information required by Form 10-SB. 
Currently, we estimate that it takes 133 hours to complete a Form 10-
SB. Therefore, we estimate that it will take a shell company 133 hours 
to prepare the information that we are requiring the company to provide 
in a Form 8-K report when it reports a transaction that causes it to 
cease being a shell company. We estimate that the company will bear 75% 
of the burden at an average rate of $175 per hour and that 25% of the 
burden will be borne by outside securities counsel retained by the 
company at an average rate of $300 per hour. Therefore, the annual Form 
8-K reporting burden being borne by the company will result in an 
increased annual cost for Form 8-K of $1,640,975.\100\ As estimated 
previously, the revisions to Item 2.01 and Item 5.01 will result in an 
annual increased cost for Form 8-K of $937,650 (12,502 total hours x 
$300 per hour x .25). We have combined these amounts to determine that 
the annual increased cost of the requirements in revised Item 2.01 and 
Item 5.01 will be $2,578,625 ($1,640,975 + $937,650).
---------------------------------------------------------------------------

    \100\ We calculated this amount in the following manner. First, 
we estimated that there would be a total annual increase in the Form 
8-K burden of 12,502 hours (133 hours per filing x 94 filings). We 
estimated that 75% of this annual increase in the Form 8-K burden 
would be borne by the company. This portion of the increased burden 
equals 9,377 hours (12,502 total hours x .75). We multiplied this 
amount by $175 per hour to arrive at the annual increased cost of 
$1,640,975 (9,377 hours x $175 per hour).
---------------------------------------------------------------------------

2. Benefits of Form 8-K Amendments
    The benefit of the Form 8-K amendments is more timely and enhanced 
disclosure for the protection of investors and increased integrity of 
the securities markets, especially the markets for securities of 
smaller companies. The Form 8-K amendments are based on the premise 
that federal securities regulation should promote full disclosure. The 
more timely and enhanced disclosure in Form 8-K filings is designed to 
provide investors in operating businesses that are newly merged with 
shell companies with a level of information that is equivalent to the 
information provided to investors in reporting companies that register 
rather than reaching a similar result through a transaction with a 
shell company. The filing of this Form 8-K report is intended to 
decrease the opportunity to engage in fraudulent and manipulative 
activity.

C. Form 20-F

1. Costs of Form 20-F Amendment
    We estimate that 1,240 foreign private issuers were registered and 
filing reports with the Commission as of December 31, 2004.\101\ The 
amendments to Form 20-F require a foreign private issuer that is a 
shell company (other than a business combination related shell company) 
to file a report on Form 20-F after completion of a business 
combination with a formerly private operating business. While we do not 
believe it is likely that any foreign private issuers that are shell 
companies would file a Form 20-F to register securities, it is 
possible. As discussed above, we have estimated that there will be 94 
shell company transactions reported on Form 8-K. As approximately 10% 
of reporting companies are foreign private issuers, we estimate that 
foreign private issuer shell companies will file 10 reports on Form 20-
F as a result of the new requirements (94 filings x .10).
---------------------------------------------------------------------------

    \101\ See SEC web site at http://www.sec.gov/divisions/corpfin/internatl/companies.shtml.
---------------------------------------------------------------------------

    As discussed above, we estimate that each entity currently spends, 
on average, approximately 2,615 hours to complete a Form 20-F.\102\ We 
estimate that the company will bear 75% of the burden at an average 
rate of $175 per hour and that 25% of the burden will be borne by 
outside securities counsel retained by the company at an average rate 
of $300 per hour. Therefore, the annual Form 20-F reporting burden 
being borne by the company will result in an increased annual cost for 
Form 20-F of $1,144,150.\103\ As estimated previously, the revisions to 
Form 20-F will result in an annual increased cost of $5,883,750 (2,615 
hours per filing x 10 filings x $300 per hour x .75). We have combined 
these amounts to determine that the annual increased cost of the 
revisions to Form 20-F will be $7,027,900 ($1,144,150 + $5,883,750).
---------------------------------------------------------------------------

    \102\ The estimate of 2,615 hours per filing for Form 20-F 
reflects the fact that the form is used by foreign private issuers, 
regardless of the size of the issuer. In estimating the increased 
annual burden and cost, we have continued to use this estimate of 
2,615 hours per filing, even though it is likely an overstatement of 
the time necessary for a shell company to complete the form, because 
we do not have a better estimate of the amount of time a smaller, 
less complex foreign private issuer would require to complete the 
form.
    \103\ We calculated this amount in the following manner. First, 
we estimated that there would be a total annual increase in the Form 
20-F burden of 26,150 hours (2,615 filings x 10 filings). We 
estimated that 25% of this annual increase in the Form 20-F burden 
would be borne by the company. This portion of the increased burden 
equals 6,538 hours (26,150 total hours x .25). We multiplied this 
amount by $175 per hour to arrive at the annual increased cost of 
$1,144,150 (6,538 hours x $175 per hour).
---------------------------------------------------------------------------

2. Benefits of Form 20-F Amendments
    Some foreign private issuers that are registered with the 
Commission may fall within the definition of ``shell company.'' We have 
decided to subject foreign private issuer shell companies to 
essentially the same requirements as are applied to domestic shell 
companies for the same reasons discussed above. The benefit of this 
amendment is more timely and enhanced disclosure for the protection of 
investors.

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

    Section 23(a)(2) of the Exchange Act \104\ requires us to consider 
the anti-competitive effects of any rules that we adopt under the 
Exchange Act. Exchange Act 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. 
Furthermore, Section 2(b) of the Securities Act \105\ and Section 3(f) 
of the Exchange Act \106\ require us, when we are engaging in 
rulemaking that requires us to consider or determine whether an action 
is necessary or appropriate in the public interest, to consider whether 
the

[[Page 42245]]

action will promote efficiency, competition, and capital formation.
---------------------------------------------------------------------------

    \104\ 15 U.S.C. 78w(a)(2).
    \105\ 15 U.S.C 77b(b).
    \106\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    The purpose of these amendments is to deter fraud and reduce abuse 
of Form S-8 in shell company transactions and to enhance our reporting 
requirements on Form 8-K (and Form 20-F with respect to foreign private 
issuers) with respect to transactions involving shell companies. We 
anticipate that these amendments will improve the proper functioning of 
the capital markets. We believe the amendments will enhance investor 
confidence in the securities markets and promote efficiency and capital 
formation. We do not expect the amendments to have any anti-competitive 
effects.
    We solicited comment on these matters in the proposing release. We 
received no comments on whether the adoption of the proposals would 
have an adverse effect on competition that is neither necessary nor 
appropriate in furtherance of the purposes of the Securities Act or the 
Exchange Act. We also did not receive any comments on whether the 
proposed amendments, if adopted, would promote efficiency, competition, 
and capital formation.

VI. Final Regulatory Flexibility Analysis

    This Final Regulatory Flexibility Analysis has been prepared in 
accordance with the Regulatory Flexibility Act.\107\ This FRFA involves 
amendments to Form S-8 under the Securities Act, Form 8-K, Form 10-Q, 
Form 10-QSB, Form 10-K, Form 10-KSB, and Form 20-F under the Exchange 
Act, Rule 405 under the Securities Act and Rule 12b-2, Rule 13a-14, and 
Rule 15d-14 under the Exchange Act, as well as new Rule 13a-19 and Rule 
15d-19 under the Exchange Act. The amendments will prohibit the use of 
Form S-8 by shell companies and require a shell company that is 
reporting an event that causes it to cease being a shell company to 
disclose the same type of information that it would be required to 
provide in registering a class of securities under the Exchange Act. 
The amendments also will define ``shell company.'' An Initial 
Regulatory Flexibility Analysis was prepared in accordance with the 
Regulatory Flexibility Act \108\ in conjunction with the proposing 
release. The proposing release included the IRFA and solicited comments 
on it.
---------------------------------------------------------------------------

    \107\ 5 U.S.C. 604.
    \108\ 5 U.S.C. 603.
---------------------------------------------------------------------------

A. Reasons for and Objectives of the Amendments

    The purpose of the amendments is to protect investors in shell 
companies and to deter fraud and abuse in our public securities markets 
through the use of shell companies.

B. Significant Issues Raised by Public Comment

    The IRFA appeared in the proposing release. We requested comment on 
any aspect of the IRFA, including the number of small entities that 
would be affected by the proposed amendments to Form S-8 and Form 8-K, 
and whether these amendments would increase the reporting, record 
keeping and other compliance requirements for small businesses. We did 
not receive any comments responding to this request.

C. Small Entities Subject to the Amendments

    The amendments will affect companies that are small entities. 
Exchange Act Rule 0-10(a) \109\ defines an issuer, other than an 
investment company, to be a ``small business'' or ``small 
organization'' if it had total assets of $5 million or less on the last 
day of its most recent fiscal year. We estimate that there are 
approximately 2,500 issuers, other than investment companies, that 
would be considered small entities as of the end of fiscal year 2004. 
The amendments will prohibit the use of Securities Act Form S-8 by 
shell companies and require shell companies to have specific and 
detailed information on file before being permitted to use Form S-8 
when they become an operating business and cease being a shell company. 
We believe that only a small percentage of the 2,500 issuers that are 
small entities are shell companies. The amendments will affect only 
shell companies. Because a shell company may have significant assets 
consisting of cash and cash equivalents, it is not certain that all 
shell companies will be ``small entities.''
---------------------------------------------------------------------------

    \109\ 17 CFR 240.0-10(a).
---------------------------------------------------------------------------

D. Reporting, Record Keeping, and Other Compliance Requirements

    The amendments impose additional disclosure requirements on shell 
companies by requiring them to provide additional business disclosure 
on Form 8-K in addition to currently required financial information. 
The amendments also require a company to report on Form 8-K when it 
becomes a shell company or when it ceases being a shell company (other 
than a business combination related shell company). Other than the 
additional disclosure requirements, the primary impact of the Form 8-K 
amendments relates to the timing of the filing. The amendments require 
foreign private issuers that are shell companies (other than business 
combination related shell companies) to file reports on Form 20-F that 
are substantially similar to the reports on Form 8-K required by shell 
companies that are not foreign private issuers. The amendments also 
require shell companies to mark check boxes on the cover sheet on Form 
10-Q, Form 10-QSB, Form 10-K, Form 10-KSB, and Form 20-F. No other new 
reporting, record keeping or compliance requirements are imposed. The 
amendments prohibit shell companies from using Form S-8.

E. Agency Action To Minimize Effect on Small Entities

    The Regulatory Flexibility Act directs us to consider significant 
alternatives that would accomplish the stated objectives, while 
minimizing any significant adverse impact on small businesses. In 
connection with the proposal, we considered the following alternatives:
    (1) Establishment of differing compliance or reporting requirements 
or timetables that take into account the resources available to small 
entities;
    (2) Clarification, consolidation, or simplification of compliance 
and reporting requirements for such small entities;
    (3) Use of performance rather than design standards; and
    (4) An exemption from coverage of the amendments, or any part 
thereof, for small entities.
    With respect to Alternative (1), the amendment to Form S-8 will 
prohibit shell companies from using the form. The amendments to Form 8-
K will shorten the time within which shell companies must file their 
required financial disclosures from 71 calendar days after the initial 
Form 8-K filing to four business days after completion of the 
transaction that causes them to cease being shell companies. It would 
be inappropriate to establish a more liberal compliance standard for 
small businesses given that the current standard applies to all public 
companies; it is the current delay in the filing of the required 
financial statements that permits and facilitates abuse by shell 
companies. The amendments will increase costs only to shell companies, 
not to all small entities, by requiring former shell companies, upon 
making a significant acquisition, to file a Form 8-K containing the 
information that would be required in an initial registration

[[Page 42246]]

statement on Form 10 or Form 10-SB to register a class of its 
securities under Section 12 of the Exchange Act.
    Most shell companies also will have to wait at least 60 days after 
ceasing to be a shell company and filing required information before 
using Form S-8 to register securities. Form S-8 is a registration 
statement used for employee benefit plans, and shell companies 
typically have few, if any, employees. Accordingly, the amendment does 
not impose any inappropriate burdens on small entities.
    With regard to Alternative (2), the amendments are clear and 
concise. Prohibiting the use of Form S-8 by shell companies does not 
increase the disclosure required unless a shell company wants to offer 
employees securities pursuant to an employee benefit plan. If the shell 
company has employees and wants to offer them securities under an 
employee benefit plan, it will have to comply with the substantially 
increased disclosure requirements of Form SB-2, Form S-1, or Form F-1. 
We believe that most shell companies, given the limitations in the 
definition of shell company on operations and assets, will not need to 
offer securities to employees pursuant to employee benefit plans. The 
amendment to Form S-8 requires most former shell companies to wait 60 
days after ceasing to be a shell company and filing the required 
disclosure before becoming eligible to use Form S-8. During this 60-day 
period, the markets can absorb disclosure that has been provided by the 
newly merged operating company. This disclosure is comparable to that 
required of other reporting companies, including ``small entities.'' 
The amendment to Form 8-K requiring the filing of additional 
information within four business days increases the amount of 
disclosure required and accelerates the deadline for filing certain of 
this disclosure. We require certain information, which was not 
specifically required previously by Form 8-K, to be included for shell 
companies.
    Alternatives (3) and (4) are not appropriate because the purpose of 
the amendments is to deter fraud. It would be difficult under 
Alternative (3) to design performance standards that would fulfill the 
Commission's statutory mandate to ensure adequate disclosure about 
shell companies and subsequent business combinations in a prompt 
manner. Alternative (4) is inappropriate because it is likely that a 
substantial percentage of shell companies will be small entities. We 
note again that these amendments apply only to shell companies, which 
constitute only a small percentage of the total number of small 
entities. An exemption for small entities would not achieve the desired 
result.

VII. Statutory Basis and Text

    The amendments are being adopted pursuant to Sections 6, 7, 8, 10, 
19, and 28 of the Securities Act, Sections 3, 10, 12, 13, 15, and 23 of 
the Exchange Act, and Sections 3(a) and 302 of the Sarbanes-Oxley Act 
of 2002.

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

    Reporting and recordkeeping requirements, Securities.

Text of Amendments

0
In accordance with the foregoing, Title 17, Chapter II of the Code of 
Federal Regulations is amended as follows:

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

0
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, 79t, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-
37, unless otherwise noted.
* * * * *

0
2. Amend Sec.  230.405 by adding the following definitions of Business 
combination related shell company and Shell company in alphabetical 
order to read as follows:


Sec.  230.405  Definitions of terms.

* * * * *
    Business combination related shell company: The term business 
combination related shell company means a shell company (as defined in 
Sec.  230.405) that is:
    (1) Formed by an entity that is not a shell company solely for the 
purpose of changing the corporate domicile of that entity solely within 
the United States; or
    (2) Formed by an entity that is not a shell company solely for the 
purpose of completing a business combination transaction (as defined in 
Sec.  230.165(f)) among one or more entities other than the shell 
company, none of which is a shell company.
* * * * *
    Shell company: The term shell company means a registrant, other 
than an asset-backed issuer as defined in Item 1101(b) of Regulation AB 
(Sec.  229.1101(b) of this chapter), that has:
    (1) No or nominal operations; and
    (2) Either:
    (i) No or nominal assets;
    (ii) Assets consisting solely of cash and cash equivalents; or
    (iii) Assets consisting of any amount of cash and cash equivalents 
and nominal other assets.


    Note: For purposes of this definition, the determination of a 
registrant's assets (including cash and cash equivalents) is based 
solely on the amount of assets that would be reflected on the 
registrant's balance sheet prepared in accordance with generally 
accepted accounting principles on the date of that determination.

* * * * *

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

0
3. 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, 77sss, 78c, 
78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll(d), 79e, 79f, 79g, 79j, 
79l, 79m, 79n, 79q, 79t, 80a-8, 80a-24, 80a-26, 80a-29, 80a-30, and 
80a-37, unless otherwise noted.
* * * * *

0
4. Amend Sec.  239.16b by revising the introductory text of paragraph 
(a) to read as follows:


Sec.  239.16b  Form S-8, for registration under the Securities Act of 
1933 of securities to be offered to employees pursuant to employee 
benefit plans.

    (a) Any registrant that, immediately prior to the time of filing a 
registration statement on this form, is subject to the requirement to 
file reports pursuant to section 13 (15 U.S.C. 78m) or 15(d) (15 U.S.C. 
78o(d)) of the Securities Exchange Act of 1934; has filed all reports 
and other materials required to be filed by such requirements during 
the preceding 12 months (or for such shorter period that the registrant 
was required to file such reports and materials); is not a shell 
company (as defined in Sec.  230.405 of this chapter) and has not been 
a shell company for at least 60 calendar days previously (subject to 
Instruction A.1.(a)(7) to Form S-8); and if it has been a shell company 
at any time previously, has filed current Form 10 information (as 
defined in Instruction A.1.(a)(6) to Form S-8) with the Commission at 
least 60 calendar days previously reflecting its status as an entity 
that is not a shell company (subject to Instruction A.1.(a)(7) to Form 
S-8), may use this form for registration under the Securities Act of 
1933 (the Act) (15 U.S.C. 77a et seq.) of the following securities:
* * * * *

0
5. Amend Form S-8 (referenced in Sec.  239.16b) by revising the 
introductory text to General Instruction A.1. and adding paragraphs 
(a)(6) and (a)(7) to General Instruction A.1., to read as follows:


[[Page 42247]]


    Note --The text of Form S-8 does not, and this amendment will 
not, appear in the Code of Federal Regulations.

FORM S-8

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

* * * * *
GENERAL INSTRUCTIONS
    A. Rule as to Use of Form S-8
    1. Any registrant that, immediately prior to the time of filing a 
registration statement on this Form, is subject to the requirement to 
file reports pursuant to Section 13 (15 U.S.C. 78m) or 15(d) (15 U.S.C. 
78o(d)) of the Securities Exchange Act of 1934 (``Exchange Act''); has 
filed all reports and other materials required to be filed by such 
requirements during the preceding 12 months (or for such shorter period 
that the registrant was required to file such reports and materials); 
is not a shell company (as defined in Sec.  230.405 of this chapter) 
and has not been a shell company for at least 60 calendar days 
previously (subject to the exception in paragraph (a)(7) of this 
Instruction A.1.); and if it has been a shell company at any time 
previously, has filed current Form 10 information with the Commission 
at least 60 calendar days previously reflecting its status as an entity 
that is not a shell company (subject to the exception in paragraph 
(a)(7) of this Instruction A.1.), may use this Form for registration 
under the Securities Act of 1933 (``Act'') (15 U.S.C. 77a et seq.) of 
the following securities:
    (a) * * *
    (6) The term ``Form 10 information'' means the information that is 
required by Form 10, Form 10-SB, or Form 20-F (Sec.  249.210, Sec.  
249.210b, or Sec.  249.220f of this chapter), as applicable to the 
registrant, to register under the Securities Exchange Act of 1934 each 
class of securities being registered using this form. A registrant may 
provide the Form 10 information in another Commission filing with 
respect to the registrant.
    (7) Notwithstanding the last two clauses of the first paragraph of 
this Instruction A.1., a business combination related shell company may 
use this form immediately after it:
    (i) Ceases to be a shell company; and
    (ii) Files current Form 10 information with the Commission 
reflecting its status as an entity that is not a shell company.
* * * * *

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

0
6. 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, 79q, 79t, 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.
* * * * *

0
7. Amend Sec.  240.12b-2 by adding the following definitions of 
Business combination related shell company and Shell company in 
alphabetical order and revising the definition of Succession to read as 
follows:


Sec.  240.12b-2  Definitions.

* * * * *
    Business combination related shell company: The term business 
combination related shell company means a shell company (as defined in 
Sec.  240.12b-2) that is:
    (1) Formed by an entity that is not a shell company solely for the 
purpose of changing the corporate domicile of that entity solely within 
the United States; or
    (2) Formed by an entity that is not a shell company solely for the 
purpose of completing a business combination transaction (as defined in 
Sec.  230.165(f) of this chapter) among one or more entities other than 
the shell company, none of which is a shell company.
* * * * *
    Shell company: The term shell company means a registrant, other 
than an asset-backed issuer as defined in Item 1101(b) of Regulation AB 
(Sec.  229.1101(b) of this chapter), that has:
    (1) No or nominal operations; and
    (2) Either:
    (i) No or nominal assets;
    (ii) Assets consisting solely of cash and cash equivalents; or
    (iii) Assets consisting of any amount of cash and cash equivalents 
and nominal other assets.


    Note: For purposes of this definition, the determination of a 
registrant's assets (including cash and cash equivalents) is based 
solely on the amount of assets that would be reflected on the 
registrant's balance sheet prepared in accordance with generally 
accepted accounting principles on the date of that determination.

* * * * *
    Succession: The term succession means the direct acquisition of the 
assets comprising a going business, whether by merger, consolidation, 
purchase, or other direct transfer; or the acquisition of control of a 
shell company in a transaction required to be reported on Form 8-K 
(Sec.  249.308 of this chapter) in compliance with Item 5.01 of that 
Form or on Form 20-F (Sec.  249.220f of this chapter) in compliance 
with Rule 13a-19 (Sec.  240.13a-19) or Rule 15d-19 (Sec.  240.15d-19). 
Except for an acquisition of control of a shell company, the term does 
not include the acquisition of control of a business unless followed by 
the direct acquisition of its assets. The terms succeed and successor 
have meanings correlative to the foregoing.
* * * * *


Sec.  240.13a-14  [Amended]

0
8. Amend Sec.  240.13a-14, paragraph (a), to revise the text ``Sec.  
229.1101 of this chapter), must include certifications'' to read 
``Sec.  229.1101 of this chapter) or a report on Form 20-F filed under 
Sec.  240.13a-19, must include certifications''.

0
9. Add Sec.  240.13a-19 to read as follows:


Sec.  240.13a-19  Reports by shell companies on Form 20-F.

    Every foreign private issuer that was a shell company, other than a 
business combination related shell company, immediately before a 
transaction that causes it to cease to be a shell company shall, within 
four business days of completion of that transaction, file a report on 
Form 20-F (Sec.  249.220f of this chapter) containing the information 
that would be required if the issuer were filing a form for 
registration of securities on Form 20-F to register under the Act all 
classes of the issuer's securities subject to the reporting 
requirements of section 13 (15 U.S.C. 78m) or section 15(d) (15 U.S.C. 
78o(d)) of the Act upon consummation of the transaction, with such 
information reflecting the registrant and its securities upon 
consummation of the transaction.


Sec.  240.15d-14  [Amended]

0
10. Amend Sec.  240.15d-14, paragraph (a), to revise the text ``Sec.  
229.1101 of this chapter), must include certifications'' to read 
``Sec.  229.1101 of this chapter) or a report on Form 20-F filed under 
Sec.  240.15d-19, must include certifications''.

0
11. Add Sec.  240.15d-19 to read as follows:


Sec.  240.15d-19  Reports by shell companies on Form 20-F.

    Every foreign private issuer that was a shell company, other than a 
business combination related shell company, immediately before a 
transaction that causes it to cease to be a shell company

[[Page 42248]]

shall, within four business days of completion of that transaction, 
file a report on Form 20-F (Sec.  249.220f of this chapter) containing 
the information that would be required if the issuer were filing a form 
for registration of securities on Form 20-F to register under the Act 
all classes of the issuer's securities subject to the reporting 
requirements of section 13 (15 U.S.C. 78m) or section 15(d) (15 U.S.C. 
78o(d)) of the Act upon consummation of the transaction, with such 
information reflecting the registrant and its securities upon 
consummation of the transaction.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
12. The authority citation for part 249 continues to read in part as 
follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C. 
1350, unless otherwise noted.
* * * * *

0
13. Amend Sec.  249.220f by:
0
a. Revising the section heading; and
0
b. Revising in paragraph (a) the text ``(15 U.S.C. 77a et seq.) or as 
an annual or transition report filed under section 13(a) or 15(d) of 
the Exchange Act (15 U.S.C. 78m(a) or 78o(d)).'' to read ``(15 U.S.C. 
78a et seq.), as an annual or transition report filed under section 
13(a) or 15(d) of the Exchange Act (15 U.S.C. 78m(a) or 78o(d)), or as 
a shell company report required under Rule 13a-19 or Rule 15d-19 under 
the Exchange Act (Sec.  240.13a-19 or 240.15d-19 of this chapter).''
    The revision reads as follows:


Sec.  249.220f  Form 20-F, registration of securities of foreign 
private issuers pursuant to section 12(b) or (g), annual and transition 
reports pursuant to sections 13 and 15(d), and shell company reports 
required under Rule 13a-19 or 15d-19 (Sec.  240.13a-19 or Sec.  
240.15d-19 of this chapter).

* * * * *
0
14. Amend Form 20-F (referenced in Sec.  249.220f) by:
0
a. Adding a check box on the cover page preceding the text ``Commission 
file number'';
0
b. Adding a check box on the cover page preceding the text that begins 
``(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS * * 
*'');
0
c. Adding paragraph (d) to General Instruction A.;
0
d. Designating the existing Instruction to Item 4.A.4 as ``1''; and
0
e. Adding Instruction 2 to Item 4.A.4.
    The additions and revision read as follows:


    Note: The text of Form 20-F does not, and this amendment will 
not, appear in the Code of Federal Regulations.

FORM 20-F

* * * * *
OR
[ballot] Shell Company Report Pursuant to Section 13 or 15(d) of the 
Securities Exchange Act of 1934
 Date of event requiring this shell company report
* * * * *
    If this is an annual report, indicate by check mark whether the 
registrant is a shell company (as defined in Rule 12b-2 of the Exchange 
Act). [ballot] Yes [ballot] No
* * * * *
GENERAL INSTRUCTIONS
    A. Who May Use Form 20-F and When It Must be Filed.
* * * * *
    (d) A foreign private issuer that was a shell company, other than a 
business combination related shell company, as those terms are defined 
in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), immediately 
before a transaction that causes it to cease to be a shell company must 
file a report on this form in accordance with the requirements set 
forth in Rule 13a-19 or Rule 15d-19 under the Exchange Act (17 CFR 
240.13a-19 and 240.15d-19). Issuers filing such reports shall provide 
all information required in, and follow all instructions of, Form 20-F 
relating to an Exchange Act registration statement of all classes of 
the registrant's securities subject to the reporting requirements of 
Section 13 (15 U.S.C. 78m) or Section 15(d) (15 U.S.C. 78o(d)) of such 
Act upon consummation of the transaction, with such information 
reflecting the registrant and its securities upon consummation of the 
transaction. Rule 12b-25 under the Exchange Act (17 CFR 240.12b-25) is 
not available to extend the due date of the report required under this 
subparagraph (d).
* * * * *
    Instructions to Item 4.A.4:
    1. * * *
    2. If you are filing a report under Rule 13a-19 or Rule 15d-19 
under the Exchange Act (17 CFR 240.13a-19 or 240.15d-19), you must 
disclose the material terms of the transaction as a result of which you 
ceased to be a shell company and you should file as an exhibit under 
Item 4(a) of the Exhibits to Form 20-F any contracts relating to the 
transaction.
* * * * *

0
15. Amend Form 8-K (referenced in Sec.  249.308) under the caption 
``Information to Be Included in the Report'' by:
0
a. Removing the word ``and'' at the end of Item 2.01(d);
0
b. Removing the period at the end of Item 2.01(e)(2) and in its place 
adding ``; and'';
0
c. Adding paragraph (f) to Item 2.01;
0
d. Removing the word ``and'' at the end of Item 5.01(a)(6);
0
e. Removing the period at the end of Item 5.01(a)(7) and in its place 
adding ``; and'';
0
f. Adding paragraph (a)(8) to Item 5.01;
0
g. Adding Item 5.06;
0
h. Redesignating paragraph (c) of Item 9.01 as paragraph (d); and
0
i. Adding new paragraph (c) to Item 9.01.
    The additions read as follows:


    Note: The text of Form 8-K does not, and this amendment will 
not, appear in the Code of Federal Regulations.

FORM 8-K CURRENT REPORT

* * * * *
INFORMATION TO BE INCLUDED IN THE REPORT
* * * * *

Item 2.01 Completion of Acquisition or Disposition of Assets

* * * * *
    (f) If the registrant was a shell company, other than a business 
combination related shell company, as those terms are defined in Rule 
12b-2 under the Exchange Act (17 CFR 240.12b-2), immediately before the 
transaction, the information that would be required if the registrant 
were filing a general form for registration of securities on Form 10 or 
Form 10-SB (17 CFR 249.210 or 17 CFR 249.210b), as applicable, under 
the Exchange Act reflecting all classes of the registrant's securities 
subject to the reporting requirements of Section 13 (15 U.S.C. 78m) or 
Section 15(d) (15 U.S.C. 78o(d)) of such Act upon consummation of the 
transaction, with such information reflecting the registrant and its 
securities upon consummation of the transaction. Notwithstanding 
General Instruction B.3. to Form 8-K, if any disclosure required by 
this Item 2.01(f) is previously reported, as that term is defined in 
Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), the registrant 
may identify the filing in which that disclosure is included instead of 
including that disclosure in this report.
* * * * *

[[Page 42249]]

Item 5.01 Changes in Control of Registrant

    (a) * * *
    (8) if the registrant was a shell company, other than a business 
combination related shell company, as those terms are defined in Rule 
12b-2 under the Exchange Act (17 CFR 240.12b-2), immediately before the 
change in control, the information that would be required if the 
registrant were filing a general form for registration of securities on 
Form 10 or Form 10-SB (17 CFR 249.210 or 17 CFR 249.210b), as 
applicable, under the Exchange Act reflecting all classes of the 
registrant's securities subject to the reporting requirements of 
Section 13 (15 U.S.C. 78m) or Section 15(d) (15 U.S.C. 78o(d)) of such 
Act upon consummation of the change in control, with such information 
reflecting the registrant and its securities upon consummation of the 
transaction. Notwithstanding General Instruction B.3. to Form 8-K, if 
any disclosure required by this Item 5.01(a)(8) is previously reported, 
as that term is defined in Rule 12b-2 under the Exchange Act (17 CFR 
240.12b-2), the registrant may identify the filing in which that 
disclosure is included instead of including that disclosure in this 
report.
* * * * *

Item 5.06 Change in Shell Company Status

    If a registrant that was a shell company, other than a business 
combination related shell company, as those terms are defined in Rule 
12b-2 under the Exchange Act (17 CFR 240.12b-2), has completed a 
transaction that has the effect of causing it to cease being a shell 
company, as defined in Rule 12b-2, disclose the material terms of the 
transaction. Notwithstanding General Instruction B.3. to Form 8-K, if 
any disclosure required by this Item 5.06 is previously reported, as 
that term is defined in Rule 12b-2 under the Exchange Act (17 CFR 
240.12b-2), the registrant may identify the filing in which that 
disclosure is included instead of including that disclosure in this 
report.
* * * * *

Item 9.01 Financial Statements and Exhibits

* * * * *
    (c) Shell company transactions. The provisions of paragraph (a)(4) 
and (b)(2) of this Item shall not apply to the financial statements or 
pro forma financial information required to be filed under this Item 
with regard to any transaction required to be described in answer to 
Item 2.01 of this Form by a registrant that was a shell company, other 
than a business combination related shell company, as those terms are 
defined in Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), 
immediately before that transaction. Accordingly, with regard to any 
transaction required to be described in answer to Item 2.01 of this 
Form by a registrant that was a shell company, other than a business 
combination related shell company, immediately before that transaction, 
the financial statements and pro forma financial information required 
by this Item must be filed in the initial report. Notwithstanding 
General Instruction B.3. to Form 8-K, if any financial statement or any 
financial information required to be filed in the initial report by 
this Item 9.01(c) is previously reported, as that term is defined in 
Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2), the registrant 
may identify the filing in which that disclosure is included instead of 
including that disclosure in the initial report.
* * * * *

0
16. Amend Form 10-Q (referenced in Sec.  249.308a) by adding a check 
box on the cover page preceding the text that begins ``APPLICABLE ONLY 
TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS * * *,'' to read as 
follows:


    Note: The text of Form 10-Q does not, and this amendment will 
not, appear in the Code of Federal Regulations.

FORM 10-Q

* * * * *
    Indicate by check mark whether the registrant is a shell company 
(as defined in Rule 12b-2 of the Exchange Act). [ballot] Yes [ballot] 
No
* * * * *

0
17. Amend Form 10-QSB (referenced in Sec.  249.308b) by adding a check 
box on the cover page preceding the text that begins APPLICABLE ONLY TO 
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS * * *,'' to read as follows:


    Note: The text of Form 10-QSB does not, and this amendment will 
not, appear in the Code of Federal Regulations.

FORM 10-QSB

* * * * *
    Indicate by check mark whether the registrant is a shell company 
(as defined in Rule 12b-2 of the Exchange Act). [ballot] Yes [ballot] 
No
* * * * *

0
18. Amend Form 10-K (referenced in Sec.  249.310) by adding a check box 
on the cover page preceding the text that begins ``State the aggregate 
market value of the voting and non-voting common equity held by non-
affiliates * * *,'' to read as follows:


    Note: The text of Form 10-K does not, and this amendment will 
not, appear in the Code of Federal Regulations.

FORM 10-K

* * * * *
    Indicate by check mark whether the registrant is a shell company 
(as defined in Rule 12b-2 of the Exchange Act). [ballot] Yes [ballot] 
No
* * * * *

0
19. Amend Form 10-KSB (referenced in Sec.  249.310b) by:
0
a. Adding a check box on the cover page preceding the text ``State 
issuer's revenues for its most recent fiscal year''; and
0
b. Removing the text ``is not'' in the sentence on the cover page that 
begins ``Check if there is no disclosure of delinquent filers in 
response to Item 405 of Regulation S-B * * *''
    The revision reads as follows:


    Note: The text of Form 10-KSB does not, and this amendment will 
not, appear in the Code of Federal Regulations.

FORM 10-KSB

* * * * *
    Indicate by check mark whether the registrant is a shell company 
(as defined in Rule 12b-2 of the Exchange Act). [ballot] Yes [ballot] 
No
* * * * *

    By the Commission.

    Dated: July 15, 2005.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 05-14311 Filed 7-20-05; 8:45 am]
BILLING CODE 8010-01-P