[Federal Register Volume 72, Number 65 (Thursday, April 5, 2007)]
[Rules and Regulations]
[Pages 16934-16960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-5947]



[[Page 16933]]

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Part III





Securities and Exchange Commission





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17 CFR Parts 200, 232, 240 and 249



Termination of a Foreign Private Issuer's Registration of a Class of 
Securities Under Section 12(g) and Duty To File Reports Under Section 
13(a) or 15(d) of the Securities Exchange Act of 1934; Final Rule

  Federal Register / Vol. 72, No. 65 / Thursday, April 5, 2007 / Rules 
and Regulations  

[[Page 16934]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 200, 232, 240 and 249

[Release No. 34-55540; International Series Release No. 1301; File No. 
S7-12-05]
RIN 3235-AJ38


Termination of a Foreign Private Issuer's Registration of a Class 
of Securities Under Section 12(g) and Duty To File Reports Under 
Section 13(a) or 15(d) of the Securities Exchange Act of 1934

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: We are adopting amendments to the rules that govern when a 
foreign private issuer may terminate the registration of a class of 
equity securities under section 12(g) of the Securities Exchange Act of 
1934 (``Exchange Act'') and the corresponding duty to file reports 
required under section 13(a) of the Exchange Act, and when it may cease 
its reporting obligations regarding a class of equity or debt 
securities under section 15(d) of the Exchange Act. Under the current 
rules, a foreign private issuer may find it difficult to terminate its 
Exchange Act registration and reporting obligations despite the fact 
that there is relatively little interest in the issuer's U.S.-
registered securities among United States investors. Moreover, 
currently a foreign private issuer can only suspend, and cannot 
terminate, a duty to report arising under section 15(d) of the Exchange 
Act. New Exchange Act Rule 12h-6 will permit a foreign private issuer 
of equity securities to terminate its reporting obligations under 
either section 13(a) or section 15(d) of the Exchange Act by meeting a 
quantitative benchmark designed to measure relative U.S. market 
interest for its equity securities that does not depend on a head count 
of the issuer's U.S. security holders. The new rule will permit a 
foreign private issuer to compare the average daily trading volume of 
its securities in the United States with its worldwide average daily 
trading volume, using a 5 percent benchmark. The accompanying rule 
amendments will also help provide U.S. investors with ready access 
through the Internet on an ongoing basis to material information about 
a foreign private issuer of equity securities that is required by its 
home country after it has exited the Exchange Act reporting system. The 
new rule will also permit a foreign private issuer of debt securities 
to terminate, rather than merely suspend, its section 15(d) reporting 
obligations.

DATES: Effective Date: June 4, 2007.

FOR FURTHER INFORMATION CONTACT: Elliot Staffin, Special Counsel, at 
(202) 551-3450, in the Office of International Corporate Finance, 
Division of Corporation Finance, U.S. Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-3628.

SUPPLEMENTARY INFORMATION: We are adopting amendments to Commission 
Rule 30-1,\1\ Rule 101 \2\ of Regulation S-T,\3\ and Rules 12g3-2, 12g-
4 and 12h-3 \4\ under the Exchange Act,\5\ and adding new Rule 12h-6 
\6\ and Form 15F \7\ under the Exchange Act.
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    \1\ 17 CFR 200.30-1.
    \2\ 17 CFR 232.101.
    \3\ 17 CFR 232.10 et seq.
    \4\ 17 CFR 240.12g3-2, 240.12g-4 and 240.12h-3.
    \5\ 15 U.S.C. 78a et seq.
    \6\ 17 CFR 240.12h-6.
    \7\ 17 CFR 249.324.
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Table of Contents

I. Executive Summary and Background
    A. Introduction
    B. Principal Comments Regarding the Reproposed Rule Amendments
    C. Summary of the Adopted Rule Amendments
II. Discussion
    A. Conditions for Equity Securities Issuers
    1. Quantitative Benchmarks
    a. Trading Volume Benchmark
    i. Calculation of the U.S. Trading Volume Benchmark as a 
Percentage of Worldwide Trading Volume Instead of Primary Trading 
Market Trading Volume
    ii. Inclusion of Off-Market Transactions in the Trading Volume 
Calculation
    iii. The 5 Percent Trading Volume Measure
    iv. Definition of Equity Securities
    v. One Year Ineligibility Period After Delisting
    vi. One Year Ineligibility Period After Termination of Sponsored 
ADR Facility
    vii. Transition Period
    b. Alternative 300-Holder Condition
    2. Prior Exchange Act Reporting Condition
    3. The One Year Dormancy Condition
    4. Foreign Listing Condition
    B. Debt Securities Provision
    C. Revised Counting Method
    D. Expanded Scope of Rule 12h-6
    1. Application of Rule 12h-6 to Successor Issuers
    2. Application of Rule 12h-6 to Prior Form 15 Filers
    E. Public Notice Requirement
    F. Form 15F
    G. Amended Rules 12g-4 and 12h-3
    H. Amendment Regarding the Rule 12g3-2(b) Exemption
    1. Extension of the Rule 12g3-2(b) Exemption Under Rule 12g3-
2(e)
    2. Electronic Publishing of Home Country Documents
    I. Concerns Regarding Securities Act Rule 701
III. Paperwork Reduction Act Analysis
IV. Cost-Benefit Analysis
V. Consideration of Impact on the Economy, Burden on Competition and 
Promotion of Efficiency, Competition and Capital Formation Analysis
VI. Regulatory Flexibility Act Certification
VII. Statutory Basis and Text of Rule Amendments

I. Executive Summary and Background

A. Introduction

    In December 2005, the Commission issued proposed amendments to its 
current rules governing when a foreign private issuer \8\ may exit the 
Exchange Act reporting regime.\9\ Under the current rules, the primary 
determinant regarding whether a foreign private issuer may terminate 
its registration of a class of securities under section 12(g) \10\ or 
suspend its reporting obligations under section 15(d) \11\ is if its 
subject securities are held of record by less than 300 residents in the 
United States.\12\ The Commission proposed to amend these rules out of 
concern that, due to the increased globalization of securities markets 
in recent decades as well as other trends, it has become difficult for 
a foreign private issuer to exit the Exchange Act reporting system even 
when there is relatively little U.S. investor interest in its U.S.-
registered securities.\13\
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    \8\ See the definition of foreign private issuer at Exchange Act 
Rule 3b-4(c) (17 CFR 240.3b-4(c)).
    \9\ Release No. 34-53020 (December 23, 2005), 70 FR 77688 
(December 30, 2005) (Original Proposing Release).
    \10\ This statutory section applies to equity securities only. 
See Exchange Act Section 12(g)(1) [15 U.S.C. 78l (g)(1)].
    \11\ 15 U.S.C. 78o(d). The effectiveness of a registration 
statement under the Securities Act of 1933 (``Securities Act'') 
triggers Section 15(d) reporting obligations. That section provides 
that an issuer cannot suspend its reporting obligations unless the 
subject class of securities is held of record by less than 300 
persons at the beginning of a fiscal year other than the year in 
which the Securities Act registration statement became effective. 
Section 15(d) does not permit an issuer to terminate, but only to 
suspend, its reporting obligations under that section.
    \12\ Exchange Act Rules 12g-4(a)(2)(i) (17 CFR 240.12g-
4(a)(2)(i)) and 12h-3(b)(2)(i) (17 CFR 240.12h-3(b)(2)(i)).
    \13\ See Original Proposing Release, 70 FR at 77689-77690.
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    We recognize that U.S. investors benefit from the investment 
opportunities provided by foreign private issuers registering their 
securities with the Commission and listing and publicly offering those 
securities in the United States. However, because of the burdens and 
uncertainties associated with terminating registration and reporting 
under the Exchange Act, the current exit process may serve as a 
disincentive to foreign private issuers accessing the

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U.S. public capital markets.\14\ In order to remove this disincentive, 
we proposed to amend the current Exchange Act exit rules for foreign 
private issuers.
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    \14\ See Part I.C of the Original Proposing Release for a 
discussion of the concerns raised by foreign private issuers 
regarding the current Exchange Act exit regime.
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    As originally proposed, new Exchange Act Rule 12h-6 would have 
permitted a foreign private issuer of equity securities to terminate 
its Exchange Act registration and reporting obligations if, among other 
conditions, it met one of a set of alternative quantitative benchmarks 
that, depending on whether the issuer was a well-known seasoned issuer 
(``WKSI''),\15\ was based either on a combination of U.S. trading 
volume and U.S. public float criteria or just U.S. public float 
data.\16\ However, numerous commenters stated that the originally 
proposed rules would still unduly restrict a significant portion of 
U.S.-registered foreign private issuers from exiting the Exchange Act 
reporting regime, thus making it unlikely that the proposed rules would 
achieve their purpose of attracting more foreign companies to U.S. 
public capital markets.
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    \15\ For purposes of proposed Rule 12h-6, a ``well-known 
seasoned issuer'' meant a well-known seasoned issuer as defined in 
Securities Act Rule 405 (17 CFR 230.405), which would have required 
the worldwide market value of an issuer's outstanding voting and 
non-voting common equity held by non-affiliates to be $700 million 
or more.
    \16\ Under the original rule proposal, a WKSI would have been 
eligible to terminate its Exchange Act reporting obligations 
regarding a class of equity securities if the U.S. average daily 
trading volume (``ADTV'') of the subject class of securities had 
been no greater than 5 percent of the ADTV of that class of 
securities in its primary trading market during a recent 12 month 
period, and U.S. residents held no more than 10 percent of the 
issuer's worldwide public float as of a specified date. A WKSI with 
greater than 5 percent U.S. ADTV or a non-WKSI would have been 
eligible for termination of reporting regarding a class of equity 
securities if, regardless of U.S. trading volume, U.S. residents 
held no more than 5 percent of the issuer's worldwide public float 
as of a specified date. See Part II.B.2.d of Release No. 34-53020.
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    In light of these criticisms, we reconsidered our approach and, in 
December 2006, we reproposed the amendments to the Exchange Act exit 
rules for foreign private issuers.\17\ As an alternative to the record 
holder standard for equity securities issuers, we proposed a 
quantitative benchmark based solely on a comparison of the average 
daily trading volume of a foreign private issuer's equity securities in 
the United States with that in its primary trading market. We reasoned 
that a standard based on trading volume may in fact be superior to the 
originally proposed standard, which was based primarily on a comparison 
of an issuer's U.S. public float with its worldwide public float, 
because it is a more direct measure of the issuer's nexus with the U.S. 
market and because trading volume data is easier to obtain than public 
float or record holder data.\18\ We concluded that, in applying an exit 
standard based on trading volume data for the U.S. and an issuer's 
primary trading market, issuers would face reduced costs when 
determining whether they can terminate their registration and reporting 
obligations under the Exchange Act, compared to the originally proposed 
standards that would have required an issuer to assess the U.S. 
residence of its security holders.\19\
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    \17\ Release No. 34-55005 (December 22, 2006), 72 FR 1384 
(January 11, 2007) (Reproposing Release).
    \18\ We reproposed the rule amendments primarily because the 
Commission did not fully address this trading volume approach in the 
Original Proposing Release.
    \19\ See Parts II.A.1.a and IV of the Reproposing Release.
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B. Principal Comments Regarding the Reproposed Rule Amendments

    We received 30 comment letters in response to the reproposed rule 
amendments.\20\ These letters represented the views of over 40 distinct 
entities, including business, financial and legal associations, foreign 
companies, financial advisory and accounting firms, law firms, and one 
foreign government. While the commenters generally strongly supported 
the trading volume-based approach and other aspects of the reproposed 
rules, many offered suggestions designed primarily to fine-tune those 
rules.
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    \20\ These comment letters, along with the letters received at 
the proposing stage, are available on the Commission's Internet Web 
site, located at http://www.sec.gov/rules/proposed/s71205.shtml, and 
in the Commission's Public Reference Room in its Washington, DC 
headquarters.
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    We received the most comments concerning the reproposed trading 
volume benchmark for equity securities issuers. Numerous commenters 
urged us to adopt a quantitative benchmark that would require an issuer 
to measure its U.S. ADTV as a percentage of its ADTV for the same class 
of securities on a worldwide basis, rather than against its ADTV in its 
primary trading market, as reproposed. Many commenters also requested 
that we permit an issuer to include off-market transactions when 
calculating its worldwide ADTV for a class of equity securities, rather 
than only when calculating its U.S. ADTV, as reproposed. Some 
commenters further urged us to permit an issuer to include trades 
conducted through alternative trading systems when determining whether 
it meets the proposed trading volume benchmark. Still others requested 
that we increase the percentage in the trading volume-based measure to 
a percentage greater than 5 percent, as reproposed, particularly if we 
did not move to a worldwide ADTV standard.
    Commenters expressed concern or requested guidance regarding a 
number of other issues, including:
     the appropriateness of the proposed provision that would 
prohibit reliance on the trading volume standard if an issuer has 
delisted its securities from a U.S. exchange during the preceding 12 
months when its U.S. ADTV exceeded the 5 percent threshold;
     the appropriateness of the proposed provision that would 
prohibit reliance on the trading volume standard if an issuer has 
terminated a sponsored American Depositary Receipts (ADR) facility \21\ 
during the preceding 12 months, regardless of whether the issuer met 
the trading volume benchmark at the time of termination;
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    \21\ An ADR is a negotiable instrument that represents an 
ownership interest in a specified number of securities, which the 
securities holder has deposited with a designated bank depositary. 
Use of an ADR facility makes it easier for a U.S. resident to 
collect dividends in U.S. dollars. Moreover, because the clearance 
and settlement process for ADRs generally is the same for securities 
of domestic companies that are traded in U.S. markets, a U.S. holder 
of an ADR is able to hold securities of a foreign company that 
trades, clears and settles within automated U.S. systems and within 
U.S. time periods.
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     whether to include convertible debt and other equity-
linked securities in the definition of equity security for purposes of 
the new exit rule;
     whether a special financial report filed pursuant to 
Exchange Act Rule 15d-2 \22\ would constitute an Exchange Act annual 
report for the purpose of the reproposed prior reporting condition;
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    \22\ 17 CFR 240.15d-2.
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     the appropriateness of the reproposed dormancy condition 
for equity securities registrants,\23\ including whether it would 
prohibit an issuer from conducting a registered offering in which an 
underwriter has agreed to a standby purchase commitment but only 
resells the purchased securities outside the United States;
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    \23\ As reproposed, Rule 12h-6 would prohibit an equity 
securities registrant from selling its securities in the United 
States in a registered offering under the Securities Act, except for 
specified registered offerings, during the 12 months preceding the 
filing of its Form 15F.
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     the appropriateness of the reproposed foreign listing 
condition for equity securities registrants,\24\ including whether it 
should apply to an issuer relying on the alternative 300 holder 
provision of Rule 12h-6, and to an

[[Page 16936]]

issuer that delists from its non-U.S. exchange in connection with being 
acquired;
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    \24\ As reproposed, Rule 12h-6 would require an equity 
securities issuer to have maintained a listing on an exchange in its 
primary trading market.
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     the role of a predecessor in determining a successor 
issuer's eligibility to terminate its Exchange Act reporting 
obligations under reproposed Rule 12h-6, including whether, under 
Exchange Act Rule 12g-3(g),\25\ a successor issuer would have to file 
an Exchange Act annual report for the predecessor's most recently 
completed fiscal year before it could terminate its reporting 
obligations under Rule 12h-6;
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    \25\ 17 CFR 240.12g-3(g).
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     whether to permit a foreign company that filed a Form 15 
previously to terminate or suspend its Exchange Act reporting 
obligations regarding a class of equity securities before the 
effectiveness of new Rule 12h-6 to terminate its reporting obligations 
under the new exit rule without having to recount its holders, as long 
as it meets that rule's trading volume benchmark;
     whether to increase the threshold number of record holders 
in the debt securities provision; and
     whether an issuer that has filed a Form 15F \26\ solely to 
terminate its reporting obligations regarding debt securities must wait 
until the effectiveness of that termination before it can submit an 
application for the Rule 12g3-2(b) exemption regarding a class of 
equity securities.
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    \26\ Like current Rules 12g-4 and 12h-3, which require the 
filing of Form 15, reproposed Rule 12h-6 would require the filing of 
a form--Form 15F--by which an issuer would certify that it meets the 
conditions for ceasing its Exchange Act reporting obligations.
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C. Summary of the Adopted Rule Amendments

    We have carefully considered commenters' concerns regarding the 
reproposed rules, and have addressed many of them in the rule 
amendments that we are adopting today. As adopted, new Exchange Act 
Rule 12h-6 and the accompanying rule amendments will:
     permit a foreign private issuer, regardless of size, to 
terminate its Exchange Act registration and reporting obligations 
regarding a class of equity securities, assuming it meets all the other 
conditions of Rule 12h-6, if, for a recent 12-month period, the U.S. 
ADTV of the subject class of securities has been no greater than 5 
percent of its worldwide ADTV--rather than 5 percent of the ADTV in its 
primary trading market, as reproposed;
     permit an issuer to include off-market transactions, 
including transactions through alternative trading systems, when 
calculating its worldwide ADTV for a class of equity securities--as 
discussed in connection with calculating its U.S. ADTV, as reproposed--
as long as the trading volume information regarding the off-market 
transactions is reasonably reliable and does not duplicate other 
trading volume information regarding the subject class of securities;
     require an issuer to wait 12 months before filing its Form 
15F in reliance on the trading volume standard if the issuer has 
delisted its class of equity securities from a national securities 
exchange or automated inter-dealer quotation system in the United 
States,\27\ or terminated a sponsored ADR facility and, at the time of 
delisting or termination, the U.S. ADTV of the subject class of 
securities exceeded 5 percent of its worldwide ADTV for the preceding 
12 months;
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    \27\ Neither the OTC Bulletin Board operated by Nasdaq nor the 
market operated by the Pink Sheets LLC are deemed to be automated 
inter-dealer quotation systems. See Release 33-6862 (April 23, 
1999), n.22.
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     retain the 300-holder standard as an alternative to the 
trading volume standard for an equity securities issuer and as the 
quantitative standard for a debt securities issuer, as reproposed;
     exclude convertible debt and other equity-linked 
securities from the definition of equity security for the purpose of 
new Rule 12h-6's trading volume provision;
     require an equity securities registrant to have at least 
one year of Exchange Act reporting, be current in reporting obligations 
for that period, and have filed at least one Exchange Act annual 
report, as reproposed;
     permit an issuer to count a special financial report filed 
pursuant to Exchange Act Rule 15d-2 as an Exchange Act annual report 
for the purpose of the new rule's prior reporting condition;
     prohibit an issuer of equity securities from selling 
securities in the United States in a registered offering under the 
Securities Act, except as specified, during the 12 months preceding the 
filing of its Form 15F (the ``dormancy condition''), substantially as 
reproposed;
     require an issuer of equity securities to have maintained 
a listing of the subject class of securities for at least the 12 months 
preceding the filing of its Form 15F on one or more exchanges in a 
foreign jurisdiction that, either singly or together with the trading 
of the same class of the issuer's securities in another foreign 
jurisdiction, constitutes the primary trading market for those 
securities, substantially as reproposed;
     define primary trading market to mean that at least 55 
percent of the trading in a foreign private issuer's class of 
securities that is the subject of Form 15F took place in, on or through 
the facilities of a securities market or markets in a single foreign 
jurisdiction or in no more than two foreign jurisdictions during a 
recent 12-month period, as long as the trading in at least one of the 
two foreign jurisdictions is larger than the trading in the United 
States for the same class of the issuer's securities;
     permit an equity securities issuer relying on the 
alternative 300-holder standard, or a debt securities issuer, to use a 
revised counting method that limits the inquiry regarding the amount of 
securities represented by accounts of customers resident in the United 
States to brokers, dealers, banks and other nominees located in the 
United States, the foreign private issuer's jurisdiction of 
incorporation, legal organization or establishment, and the one or two 
jurisdictions comprising the issuer's primary trading market if 
different from the issuer's jurisdiction of incorporation, legal 
organization or establishment, as reproposed;
     permit an issuer of equity or debt securities to rely on 
the assistance of an independent information services provider when 
determining whether the issuer falls below the 300-holder standard, as 
reproposed;
     permit a successor issuer meeting specified conditions to 
terminate its Exchange Act reporting obligations under new Rule 12h-6, 
as reproposed; \28\
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    \28\ See Part II.D.1 of this release for clarification regarding 
the limited role of the predecessor in determining a successor 
issuer's eligibility to terminate its Exchange Act reporting 
obligations under Rule 12h-6.
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     permit a foreign private issuer that filed a Form 15 and 
suspended or terminated its Exchange Act reporting obligations under 
the current exit rules before the effective date of Rule 12h-6 to 
terminate its Exchange Act reporting obligations under new Exchange Act 
Rule 12h-6, as long as, if regarding a class of equity securities, the 
issuer meets Rule 12h-6's listing condition and either the trading 
volume or alternative-300 holder condition or, if regarding a class of 
debt securities, the issuer meets the rule's 300-holder condition for 
debt issuers;
     extend the Rule 12g3-2(b) exemption to a foreign private 
issuer of equity securities, including a successor issuer and prior 
Form 15 filer, immediately upon its termination of reporting under Rule 
12h-6, and require the issuer to maintain that exemption by publishing 
in English specified material home country documents required by

[[Page 16937]]

Rule 12g3-2(b) \29\ on its Internet Web site or through an electronic 
information delivery system generally available to the public in its 
primary trading market, as reproposed;
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    \29\ See Exchange Act Rule 12g3-2(b)(1)(iii) (17 CFR 240.12g3-
2(b)(1)(iii)).
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     permit a non-reporting company that has received or will 
receive the Rule 12g3-2(b) exemption, upon application to the 
Commission and not pursuant to Rule 12h-6, to publish its ``ongoing'' 
home country documents required under Rule 12g3-2(b) on its Internet 
Web site or through an electronic information delivery system rather 
than submit them in paper to the Commission; and
     permit an issuer that has filed a Form 15F to terminate 
its Exchange Act reporting obligations regarding a class of debt 
securities to establish the Rule 12g3-2(b) exemption for a class of 
equity securities upon the effectiveness of its termination of 
reporting under Rule 12h-6, by submitting an application for the Rule 
12g3-2(b) exemption after filing its Form 15F.
    We are also adopting, as reproposed, procedural conditions that 
will:
     require a foreign private issuer to file a Form 15F 
providing information with respect to whether the issuer meets the 
requirements for terminating its reporting obligations under Rule 12h-
6;
     automatically suspend an issuer's Exchange Act reporting 
obligations upon the filing of its Form 15F and trigger a 90-day 
waiting period at the end of which, assuming the Commission has no 
objections, the suspension will become a termination of reporting; and
     require a foreign private issuer to publish a notice, such 
as a press release, announcing its intention to terminate its Exchange 
Act reporting obligations under Rule 12h-6, before or at the time of 
filing its Form 15F.
    We believe the rules that we are adopting today provide meaningful 
protection of U.S. investors by permitting the termination of Exchange 
Act registration and reporting only by those foreign registrants with 
relatively low U.S. market interest in their U.S.-registered 
securities. Compared to the current exit rules, Rule 12h-6 will 
establish a more clearly defined process with a more appropriate 
benchmark by which a foreign private issuer can terminate its Exchange 
Act reporting obligations. As a result, we believe foreign private 
issuers should be more willing initially to register their securities 
with the Commission, which will provide more investment choices for 
U.S. investors.
    At the same time, we believe the conditions that determine a 
foreign private issuer's eligibility to terminate its Exchange Act 
registration and reporting regarding a class of equity securities under 
new Rule 12h-6 will serve to protect U.S. investors. For example, the 
prior reporting condition \30\ is intended to provide investors with at 
least one complete year's worth of Exchange Act reports, including an 
annual report, upon which they can base their investment decisions 
about a particular foreign registrant before that registrant exits the 
Exchange Act reporting system. The dormancy condition is designed to 
deter a foreign private issuer's promotion of U.S. investor interest 
through recent registered capital-raising shortly before exiting our 
reporting system. The one year reporting and dormancy conditions are 
consistent with the statutory requirements under section 15(d).
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    \30\ See p. 12 and Part II.A.2 of this release.
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    The foreign listing condition and U.S. trading volume benchmark 
support our view that, before a foreign private issuer may terminate 
its Exchange Act reporting obligations under Rule 12h-6, it must have 
been subject to an ongoing disclosure and financial reporting regime, 
and have a significant market following, in its primary trading market. 
We have set the U.S. trading volume benchmark at such a level that, 
although there may be some U.S. investor interest in the subject 
securities of an issuer meeting the benchmark, that interest would 
appear to be sufficiently diminished so that a foreign private issuer 
should not be required to continue its Exchange Act reporting if it 
determines that it is no longer desirable to continue as a U.S. 
registrant.
    The condition restricting the ability of an issuer to rely on the 
trading volume standard under specified circumstances (U.S. delisting 
and termination of a sponsored ADR facility) should deter an issuer 
from excluding U.S. investors, particularly retail investors, from 
investing in their securities when U.S. market interest is still 
significant. The immediate availability of the exemption under Rule 
12g3-2(b) will foster access by U.S. investors to ongoing home country 
information about an issuer after it terminates its Exchange Act 
registration and reporting under Rule 12h-6. Finally, the conditions 
relating to the filing of Form 15F and the publication of a press 
release or other notice will promote transparency in the exit process.

II. Discussion

A. Conditions for Equity Securities Issuers

1. Quantitative Benchmarks
a. Trading Volume Benchmark
    As adopted, new Exchange Act Rule 12h-6 will enable a foreign 
private issuer of equity securities, regardless of size, to qualify for 
termination of its Exchange Act reporting by meeting a quantitative 
benchmark provision that does not depend on the number of its U.S. 
record holders or the percentage of its securities held by those 
holders. Under new Rule 12h-6, an issuer will be able to terminate its 
Exchange Act registration and reporting obligations regarding a class 
of equity securities, assuming it meets the other conditions of Rule 
12h-6, if the ADTV of the subject class of equity securities in the 
United States has been 5 percent or less of the ADTV of that class of 
securities on a worldwide basis during a recent 12-month period.\31\ 
This trading volume benchmark is substantially similar to the 
reproposed standard, except that the adopted benchmark requires an 
issuer to measure its U.S. ADTV as a percentage of its worldwide ADTV 
rather than the ADTV in its primary trading market.
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    \31\ New Exchange Act Rule 12h-6(a)(4)(i) (17 CFR 240.12h-
6(a)(4)(i)).
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    A threshold matter in this regulatory initiative has been what is 
the most appropriate benchmark for equity securities that would best 
serve the interests of investors and issuers, and most commenters 
addressed this issue. Most of the commenters agreed that a benchmark 
based solely on trading volume is superior to one based on a 
combination of U.S. public float and trading volume criteria or just 
U.S. public float data, as under the originally proposed Rule 12h-6, or 
one based on the number of record holders in the United States or on a 
worldwide basis, as under the current exit rules. Most commenters 
stressed that trading volume data is easier to obtain and confirm than 
is the data required for a U.S. public float or record holder 
determination.\32\ As commenters have noted, it is difficult for a 
reporting foreign private issuer to determine accurately the specific 
country of residence of its investors.\33\ Because a public float 
benchmark would require such a determination to varying degrees, most 
commenters agreed with our conclusion that the reproposed trading

[[Page 16938]]

volume-based benchmark should result in reduced costs to issuers in 
determining whether they can terminate their Exchange Act reporting 
obligations.\34\
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    \32\ See, for example, the letter, dated February 12, 2007, from 
Cleary Gottlieb, Steen & Hamilton LLP (Cleary Gottlieb).
    \33\ See the comment letters discussed in Part II.A.1.a of the 
Reproposing Release.
    \34\ See, for example, the letter, dated February 12, 2007, from 
the European Association for Listed Companies and other signatories 
(EALIC).
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    Some commenters supported the reproposed trading volume measure 
because it would provide a simple and clear measure of the degree of 
U.S. market interest in an issuer's equity securities.\35\ Some 
commenters expressed the view that basing the new exit rule on a 
trading volume measure would help ensure that an issuer's termination 
of Exchange Act registration and reporting would not have a significant 
impact on the primary price-setting determinants of an issuer's equity 
securities, which would allow for U.S. investors to trade in that 
issuer's securities following its U.S. deregistration.\36\
---------------------------------------------------------------------------

    \35\ See, for example, the letter, dated February 12, 2007, from 
Sullivan & Cromwell LLP (Sullivan & Cromwell) and the letter, dated 
January 2, 2007, from Galileo Global Advisors (Galileo).
    \36\ See, for example, the letter from Cleary Gottlieb.
---------------------------------------------------------------------------

    Commenters expressed their belief that adoption of the reproposed 
trading volume standard would enable significantly more foreign private 
issuers to exit the Exchange Act reporting regime if they so 
desire.\37\ Consequently, as one commenter indicated, by removing 
restrictions regarding the ability to exit U.S. securities markets, 
adoption of new Rule 12h-6 and the accompanying amendments will have a 
major impact on the perception that foreign companies have of those 
markets, making the U.S. capital markets ``much more attractive and 
competitive on an international scale.''\38\
---------------------------------------------------------------------------

    \37\ See, for example, the letter, dated February 12, 2007, from 
the European Commission.
    \38\ See the letter from Cleary Gottlieb.
---------------------------------------------------------------------------

    For the above reasons, we are adopting a quantitative exit standard 
for equity securities registrants based solely on trading volume 
instead of one based on a combination of trading volume and public 
float criteria or just public float data. We also are adopting, as 
reproposed, one trading volume standard that will apply to all issuers 
of equity securities. Commenters generally supported having one 
benchmark applicable to any foreign private issuer, regardless of 
size.\39\ Although we originally proposed a set of quantitative 
benchmarks that depended primarily on whether an issuer was a WKSI, we 
are adopting the same trading volume standard for a smaller issuer as 
for a larger issuer in order to provide increased flexibility and 
simplification to the Exchange Act deregistration regime, and for the 
other reasons discussed in the Reproposing Release.\40\
---------------------------------------------------------------------------

    \39\ See, most recently, the letter, dated February 23, 2007, 
from the American Bar Association, Section of Business Law (ABA).
    \40\ For example, a trading volume standard that favored WKSIs 
could discourage smaller foreign companies from entering U.S. public 
capital markets, to the detriment of U.S. investors. Moreover, 
commenters at the proposing stage noted that the costs of continued 
Exchange Act reporting fall disproprotionately on smaller issuers. 
See Part II.A.1.a of the Reproposing Release.
---------------------------------------------------------------------------

i. Calculation of the U.S. Trading Volume Benchmark as a Percentage of 
Worldwide Trading Volume Instead of Primary Trading Market Trading 
Volume
    Numerous commenters requested that the Commission calculate U.S. 
trading volume as a percentage of worldwide trading volume rather than 
as a percentage of ADTV in the issuer's primary trading market,\41\ as 
reproposed.\42\ The primary rationale for this request is that, with 
the increased globalization of securities markets, many issuers now 
trade on multiple non-U.S. markets. According to these commenters, 
since the goal of the reproposed trading volume benchmark is to 
determine the relative importance of the U.S. trading market for an 
issuer's securities, an issuer should be able to take into account all 
non-U.S. trading in its securities, and not just the trading that has 
occurred in the one or two jurisdictions comprising its primary trading 
market.\43\
---------------------------------------------------------------------------

    \41\ As discussed in Part II.A.4 of this release, we define 
primary trading market to mean that at least 55 percent of the 
trading in a foreign private issuer's subject class of securities 
took place in, on or through the facilities of a securities market 
or markets in a single foreign jurisdiction or in no more than two 
foreign jurisdictions during a recent 12-month period. If an issuer 
aggregates the trading in two foreign jurisdictions, the trading 
market for the issuer's securities in at least one of the two 
foreign jurisdictions must be larger than the United States trading 
market for the same class of the issuer's securities. We proposed a 
substantially similar definition at the reproposing stage.
    \42\ See, for example, the letter, dated February 8, 2007, from 
BusinessEurope, the letters, dated February 12, 2007, from Davis 
Polk & Wardwell (Davis Polk), Linklaters, and Makinson Cowell, and 
the letters from Cleary Gottlieb, EALIC, and the EU. In contrast, 
only one commenter opposed using worldwide trading volume. See the 
letter from Galileo.
    \43\ See the letters from Cleary Gottlieb and EALIC.
---------------------------------------------------------------------------

    Some commenters maintained that, while it is reasonable to base 
Rule 12h-6's foreign listing condition on the reproposed primary 
trading market definition, it is not so for the trading volume 
benchmark.\44\ As discussed below, the purpose of the foreign listing 
condition is to help assure that there is a non-U.S. jurisdiction that 
principally regulates and oversees the issuance and trading of the 
issuer's securities and the issuer's disclosure obligations to 
investors.\45\ Limiting the definition of primary trading market in 
this context to no more than two jurisdictions helps to further the 
purpose of the foreign listing condition. In contrast, the purpose of 
the trading volume benchmark is to measure the relative U.S. market 
interest in a foreign private issuer's equity securities. Accounting 
for as much of the issuer's trading as is reasonably possible would 
further the purpose of this rule.
---------------------------------------------------------------------------

    \44\ See the letter from Linklaters.
    \45\ See Part II.A.4 of this release.
---------------------------------------------------------------------------

    We agree that, in light of the number of foreign registrants that 
have listings in more than two jurisdictions, and given the purpose of 
the trading volume benchmark, measuring an issuer's U.S. ADTV as a 
percentage of its worldwide ADTV would increase the likelihood of 
obtaining a more accurate measure of relative U.S. market interest for 
that issuer's equity securities. Therefore, we are adopting a trading 
volume benchmark for new Rule 12h-6 that will require an issuer to use 
as the denominator of its trading volume calculation its worldwide ADTV 
for the subject class of securities.\46\
---------------------------------------------------------------------------

    \46\ Worldwide ADTV includes U.S. ADTV. Some commenters favored 
a trading measure based on the dollar value of shares traded rather 
than on the number of shares traded. See the letter, dated February 
12, 2007, from Ziegler, Ziegler and Associates (Ziegler) and the 
letter from Galileo. We decline to adopt a trading value measure 
because we believe that it would add an unnecessary level of 
complexity and cost to the non-record holder determination.
---------------------------------------------------------------------------

ii. Inclusion of Off-Market Transactions in the Trading Volume 
Calculation
    We reproposed to require an issuer to include both transactions 
occurring on a stock exchange and over-the-counter trades for the 
purpose of calculating U.S. ADTV for the numerator of the trading 
volume benchmark, but to include only on-exchange transactions for the 
purpose of calculating its ADTV for the denominator (its primary 
trading market, as reproposed). We did so based on our belief that 
trading volume information about over-the-counter trades was more 
readily available in the United States than in many foreign 
jurisdictions.
    Numerous commenters \47\ urged the Commission to permit an issuer 
to include ``off-market'' transactions when determining whether it 
meets the 5

[[Page 16939]]

percent trading volume standard, rather than just transactions 
occurring on a stock exchange, as reproposed. These commenters 
maintained that it was inappropriate to require an issuer to include 
both on-exchange and off-exchange transactions when calculating its 
U.S. ADTV but not when calculating its worldwide trading volume. As 
noted by some of these commenters, members of Euronext markets are 
currently required to report off-market transactions.\48\ Moreover, 
some commenters noted that an EU Directive,\49\ scheduled for 
effectiveness in November 2007, will generally require the reporting of 
off-market transactions, which will make information regarding off-
market transactions generally available in Europe the same way that 
such information is available through a transaction reporting plan in 
the United States.\50\
---------------------------------------------------------------------------

    \47\ See the letters from BusinessEurope, Cleary Gottlieb, Davis 
Polk, EALIC, the EU, Makinson Cowell, and Sullivan & Cromwell, and 
the letters, dated February 12, 2007, from the International Bar 
Association and Skadden Arps Slate Meagher & Flom (Skadden Arps).
    \48\ See, for example, the letter from Cleary Gottlieb.
    \49\ Directive 2004/39/EC, also known as the Market in Financial 
Instruments Directive (MiFID).
    \50\ See the letters from Cleary Gottlieb, the EU, and 
BusinessEurope.
---------------------------------------------------------------------------

    Some of these commenters urged the Commission to permit an issuer 
to include not only off-market transactions that currently occur 
through traditional over-the-counter means, but those that may occur 
through alternative trading systems.\51\ According to these commenters, 
MiFID will encourage the development of such trading systems.\52\ These 
commenters stated that, as long as trading information is credible and 
the sources reliable, an issuer should be able to include information 
about securities transactions regardless of the platform on which they 
occur.\53\
---------------------------------------------------------------------------

    \51\ See the letters from the EU and Davis Polk.
    \52\ See, for example, the EU letter.
    \53\ See, for example, the letter from Davis Polk.
---------------------------------------------------------------------------

    Some commenters requested that, if the Commission does not permit 
an issuer to include off-market transactions when determining its 
worldwide trading volume for the denominator of its trading volume 
calculation, it should also prohibit the inclusion of off-market 
transactions when determining its U.S. ADTV for the numerator of that 
calculation.\54\ In contrast, one commenter, which favored a worldwide 
trading volume measure, expressly requested that the Commission 
prohibit the inclusion of off-market transactions for both the 
numerator and denominator because of the difficulty of obtaining over-
the-counter trading information.\55\
---------------------------------------------------------------------------

    \54\ See the letters from BusinessEurope and the EU.
    \55\ See the letter from Skadden Arps.
---------------------------------------------------------------------------

    These comments have persuaded us that, for at least some foreign 
private issuers, information regarding off-exchange transactions in 
non-U.S. jurisdictions will be readily obtainable. Therefore, under 
adopted Rule 12h-6, when making its trading volume determination, an 
issuer must include in its calculation of U.S. ADTV both on-exchange 
and off-exchange transactions, as reproposed. For both on-exchange and 
off-exchange transactions in the United States, we expect an issuer to 
be able to obtain relevant trading volume information as reported 
pursuant to an effective transaction reporting plan,\56\ pursuant to 
NASD rules,\57\ or reported by a national securities exchange otherwise 
than pursuant to an effective transaction reporting plan. In addition, 
an issuer may include in its calculation of worldwide ADTV off-market 
transactions, including transactions conducted through alternative 
trading systems, in addition to transactions occurring on an exchange, 
as long as an issuer has obtained the information concerning the off-
market transactions from publicly available sources or third-party 
information service providers, upon which the issuer has reasonably 
relied in good faith, and as long as the off-market transaction 
information does not duplicate any other trading volume information 
obtained.
---------------------------------------------------------------------------

    \56\ Rule 601 of Regulation NMS (17 CFR 242.601) requires every 
national securities exchange to file a transaction reporting plan 
regarding transactions in listed equity and Nasdaq securities.
    \57\ See, for example, NASD Manual Rule 6600 et seq. for rules 
regarding recording and reporting transactions in OTC Equity 
Securities. A member broker-dealer must report information 
concerning OTC trades not involving a listed security, including a 
Nasdaq security, under the NASD rules rather than pursuant to a 
transaction reporting plan since the latter only covers unlisted 
transactions involving listed (and Nasdaq) securities.
---------------------------------------------------------------------------

    In response to our request for comments on whether issuers should 
be required to obtain trading volume data from particular sources, a 
number of commenters advocated that the final rules provide issuers 
with sufficient flexibility to use such data sources as they deem 
reliable and appropriate.\58 \The adopted rules do not specify any 
particular data sources that issuers must use to determine either its 
U.S. or worldwide trading volume. In this respect, when obtaining 
information concerning either on-exchange or off-exchange transactions, 
issuers will have the latitude to use market data vendors or other 
commercial service providers and publicly available sources of market 
information that they reasonably believe to be reliable and that do not 
duplicate trading volume information obtained from other sources, such 
as various exchanges or markets.\59\ Issuers will be required to 
disclose their trading volume data sources on Form 15F, which will 
inform investors of the data sources used.\60\
---------------------------------------------------------------------------

    \58\ See, for example, the letters from Cleary Gottlieb and 
EALIC.
    \59\ See Instruction 3.c to Item 4 of Form 15F.
    \60\ See Item 4.F of Form 15F.
---------------------------------------------------------------------------

iii. The 5 Percent Trading Volume Measure
    Commenters expressed a variety of views on whether 5 percent U.S. 
ADTV was the appropriate threshold for the trading volume benchmark. 
Although some commenters requested that the Commission increase the 
percentage to 10 percent ADTV,\61\ many others supported the 5 percent 
threshold.\62\ Moreover, some of the commenters that requested an 
increase to 10 percent did so only if the Commission decided not to 
adopt a world-wide trading based benchmark.\63\
---------------------------------------------------------------------------

    \61\ See the letter, dated February 9, 2007, from SGL Carbon, 
the letter, dated February 12, 2007, from Fried Frank Harris Shriver 
& Jacobson (Fried Frank), and the letter from Skadden Arps. Another 
commenter requested an increase to 15 percent. See the letter from 
i-CABLE Communications Ltd. (i-CABLE).
    \62\ See the letters from Cleary Gottlieb, EALIC, Galileo, 
Sullivan & Cromwell, and the New York State Society of Certified 
Public Accountants (NYSSCPA).
    \63\ See the letters from the ABA, BusinessEurope, and 
Linklaters.
---------------------------------------------------------------------------

    We believe that adoption of the ``5 percent of worldwide trading 
volume'' standard will permit foreign companies with relatively little 
U.S. market interest to deregister.\64\ Moreover, by permitting an 
issuer to include both on-exchange and off-exchange transactions when 
calculating its worldwide ADTV, we have addressed the concerns of 
commenters who suggested the 5 percent threshold could be too low to 
achieve the rule's purpose of reducing the disincentive to U.S. 
registration that may be caused by the current exit regime.
iv. Definition of Equity Securities
---------------------------------------------------------------------------

    \64\ See Part III, n. 191 of this release.
---------------------------------------------------------------------------

    We reproposed that, for purposes of new Rule 12h-6, an issuer would 
use the definition of equity security provided in Exchange Act Rule 
3a11-1.\65\ That provision includes equity-linked securities, such as 
convertible debt securities and warrants, within the definition of 
equity security. Several commenters \66\ requested that the Commission 
exclude equity-linked securities from the definition of equity

[[Page 16940]]

security on the grounds that trading volume information for equity-
linked securities is difficult to obtain. One commenter suggested using 
instead the definition of equity security provided in the Securities 
Act cross-border rules, which explicitly excludes convertible debt and 
other equity-linked securities.\67\
---------------------------------------------------------------------------

    \65\ 17 CFR 240.3a11-1.
    \66\ See the letters from BusinessEurope, the EU, EALIC and 
Cleary Gottlieb.
    \67\ See the letter from Cleary Gottlieb, which cites Securities 
Act Rule 800(b) (17 CFR 230.800(b)).
---------------------------------------------------------------------------

    We agree with those commenters that, because trading volume 
information concerning convertible debt and other equity-linked 
securities is more difficult to obtain than trading volume information 
for the underlying equity securities, an issuer should not have to 
include equity-linked securities when determining whether it meets the 
trading volume benchmark. The same reasoning applies to an issuer's 
determination concerning the foreign listing condition, which requires 
an issuer to meet the definition of primary trading market, which is a 
trading volume-based definition.\68\ Therefore, we are adopting a 
definition of equity security that is based on Rule 3a11-1, except 
that, for purposes of the trading volume and foreign listing provisions 
of Rule 12h-6, the definition explicitly excludes:
---------------------------------------------------------------------------

    \68\ See Part II.A.4 of this release.
---------------------------------------------------------------------------

     any debt security that is convertible into an equity 
security, with or without consideration;
     any debt security that includes a warrant or right to 
subscribe to or purchase an equity security;
     any such warrant or right; or
     any put, call, straddle, or other option or privilege that 
gives the holder the option of buying or selling a security but does 
not require the holder to do so.\69\
---------------------------------------------------------------------------

    \69\ New Exchange Act Rule 12h-6(f)(3) (17 CFR 240.12h-6(f)(3)). 
These are the same categories of securities excluded from the 
definition of equity security under Securities Act Rule 800(b).
---------------------------------------------------------------------------

v. One Year Ineligibility Period After Delisting
    We are adopting, substantially as proposed, a condition to the use 
of Rule 12h-6's trading volume standard and corresponding eligibility 
to file Form 15F. This condition provides that if a foreign private 
issuer has had its equity securities delisted from a registered 
national securities exchange or automated inter-dealer quotation system 
within one year before filing the Form 15F, it must have satisfied the 
trading volume percentage as of the date of delisting, as measured over 
the 12 months preceding the date of delisting.\70\ Under this 
condition:
---------------------------------------------------------------------------

    \70\ New Exchange Act Rule 12h-6(b)(1) (17 CFR 240.12h-6(b)(1)). 
We previously proposed to codify this delisting requirement, along 
with a similar requirement concerning termination of a sponsored ADR 
facility, as Notes to paragraph (a)(4) of reproposed Rule 12h-6. We 
have restructured final Rule 12h-6 to provide for these requirements 
in a separate paragraph and have changed the paragraph numbering of 
the adopted rule accordingly. As adopted, Rule 12h-6(b) does not 
apply to issuers terminating their reporting obligations under 
either Rule 12h-6(d) (the successor issuer provision) or Rule 12h-
6(i) (the prior Form 15 filer provision).
---------------------------------------------------------------------------

     a listed foreign private issuer that satisfied the trading 
volume condition will be able to delist from its stock exchange and 
terminate its Exchange Act registration and reporting obligations 
concurrently; and
     a listed foreign private issuer that did not satisfy the 
trading volume condition will be able to delist but will not be 
eligible to file a Form 15F and terminate its Exchange Act registration 
and reporting obligations until one year after the date of delisting, 
assuming that, at that time, it meets the conditions of the rule.\71\
---------------------------------------------------------------------------

    \71\ For example, an issuer that failed to meet the trading 
volume standard at the date of delisting would have to meet the 
trading volume standard one year later when filing its Form 15F. If, 
notwithstanding its delisting, an active U.S. over-the-counter 
market in the company's securities continued, the company would not 
be eligible to use Rule 12h-6 and file a Form 15F in reliance on the 
trading volume benchmark.
---------------------------------------------------------------------------

    We are adopting this condition in order to prevent the new trading 
volume-based rule from creating an incentive for a foreign private 
issuer to delist its securities from a U.S. exchange for the purpose of 
decreasing its U.S. trading volume. As one commenter suggested early 
on, if we were to adopt a standard based solely on trading volume, a 
foreign private issuer that delisted its securities from a U.S. 
exchange before its trading volume fell below the applicable percentage 
should not be eligible to terminate its registration under such a 
standard.\72\
---------------------------------------------------------------------------

    \72\ See the letter, dated February 9, 2004, from Cleary 
Gottlieb.
---------------------------------------------------------------------------

    A few commenters requested that the Commission remove this 
delisting condition on the grounds that it imposed a restraint on the 
use of the new exit rule that was not necessary for the protection of 
U.S. investors.\73\ We agree that companies should not be unnecessarily 
restricted in choosing the markets on which their securities are 
listed. Thus, we do not believe that delisting from a U.S. exchange 
should result in an automatic bar against a foreign private issuer from 
using the new exit rule. Nonetheless, we share the concern about 
possible negative impacts on U.S. investors stemming from a measure 
based solely on trading volume. Moreover, by requiring companies to 
remain registered and reporting under the Exchange Act for a period of 
time after delisting when, before delisting, the company had a 
relatively active U.S. market for its securities, U.S. investors will 
have access to information prepared in accordance with the Commission's 
financial reporting and disclosure requirements for a period of time 
during which, most likely, the U.S. market will be diminishing. 
Accordingly, we are adopting the delisting condition substantially as 
proposed.\74\
---------------------------------------------------------------------------

    \73\ See the letters from Galileo, Makinson Cowell and SGL 
Carbon.
    \74\ Some commenters requested that we exempt from the delisting 
condition an issuer that has been involuntarily delisted. See, for 
example, the letter, dated February 22, 2007, from Cravath, Swaine & 
Moore (Cravath). We decline to do so since such an exemption could 
encourage an issuer not to comply with exchange standards in order 
to get delisted.
---------------------------------------------------------------------------

vi. One Year Ineligibility Period After Termination of Sponsored ADR 
Facility
    As part of the rule reproposal, we proposed an additional condition 
to an issuer's use of Rule 12h-6 and eligibility to file Form 15F in 
reliance on the trading volume provision. That condition provided that 
a foreign private issuer must not have terminated any sponsored ADR 
facility within the 12 month period before filing its Form 15F. We 
proposed that condition in order to encourage foreign private issuers 
to maintain their ADR facilities, even after they delist from a U.S. 
market and terminate their Exchange Act reporting obligations.
    After a foreign private issuer delists and deregisters, investors 
will benefit if its ADRs continue to be traded in the over-the-counter 
market in the United States. The termination of ADR facilities has a 
detrimental impact on holders, imposing fees and other charges on 
investors and, when investors are cashed out, subjecting investors to 
unplanned tax consequences and limiting their investment choices.\75\ 
In addition, the termination of ADR facilities will limit the ability 
of many U.S. investors to effect transactions in

[[Page 16941]]

the securities of the subject foreign company.
---------------------------------------------------------------------------

    \75\ When an issuer terminates its ADR facility, the holders of 
ADRs generally have the option to make arrangements to hold the 
underlying securities directly. However, if holders are unable or 
unwilling to make these arrangements, or to pay the costs associated 
with these arrangements, the holders will have their investment 
cashed out, that is, the underlying securities will generally be 
sold into the home market and the net proceeds (after deducting fees 
and expenses of the selling broker and the depositary bank) remitted 
to the former ADR holders.
---------------------------------------------------------------------------

    Some commenters opposed the ADR facility termination condition on 
grounds similar to those raised against the delisting condition. 
However, these commenters also objected to the fact that, unlike the 
delisting condition, the proposed ADR facility condition applied 
regardless of whether, at the time of termination of its ADR facility, 
an issuer met the trading volume threshold measured for the previous 12 
months.\76\ One commenter stated that adoption of the reproposed 
condition could dissuade issuers from sponsoring ADR programs, to the 
detriment of U.S. investors.\77\
---------------------------------------------------------------------------

    \76\ See, for example, the letter, dated February 12, 2007, from 
the New York State Bar Association (N.Y. State Bar), and the letters 
from the ABA and Linklaters.
    \77\ See the letter from the N.Y. State Bar.
---------------------------------------------------------------------------

    We continue to believe that, due to the importance of ADR 
facilities for U.S. investors, a sponsored ADR facility termination 
condition is appropriate. However, we agree with commenters that the 
importance of this concern significantly diminishes if, at the time of 
its termination of a sponsored ADR facility, an issuer's U.S. ADTV has 
already fallen below the trading volume threshold.
    Therefore, we are adopting a condition providing that, if an issuer 
has terminated a sponsored ADR facility, and at the time of termination 
the average daily trading volume in the United States of the ADRs 
exceeded 5 percent of the average daily trading volume of the 
underlying class of securities on a worldwide basis for the preceding 
12 months, the issuer must wait 12 months before it may file a Form 15F 
to terminate its Exchange Act reporting obligations in reliance on Rule 
12h-6's trading volume provision.\78\ We are also clarifying that, for 
purposes of Rule 12h-6's trading volume provision, an issuer must 
calculate the trading volume of its ADRs in terms of the number of 
securities represented by those ADRs.\79\
---------------------------------------------------------------------------

    \78\ New Exchange Act Rule 12h-6(b)(2) (17 CFR 240.12h-6(b)(2)).
    \79\ Note to paragraph (a)(4) of Rule 12h-6. Typically the ratio 
defining the number of common or ordinary shares underlying each ADR 
is included as part of the deposit agreement or in an exhibit to 
that agreement.
---------------------------------------------------------------------------

vii. Transition Period
    In connection with our reproposal of Rule 12h-6, we solicited 
comment on whether the proposed delisting and ADR termination 
conditions should apply to a foreign private issuer that delisted its 
equity securities from a U.S. exchange or terminated a sponsored ADR 
facility before the effective date of the new exit rule. One commenter 
\80\ requested that neither provision apply to an issuer that delisted 
or terminated a sponsored ADR facility before December 13, 2006, which 
is the date of the open meeting at which the Commission voted to 
repropose Rule 12h-6 and the accompanying rule amendments.
---------------------------------------------------------------------------

    \80\ See the letter from the ABA.
---------------------------------------------------------------------------

    We agree that, in the interests of fairness, an issuer should not 
be precluded from relying on Rule 12h-6's trading volume provision 
because it delisted or terminated a sponsored ADR facility before the 
Commission had even proposed to make those acts meaningful to the 
application of Rule 12h-6. However, we believe that March 21, 2007 
should be the dispositive date since, on that date, the Commission 
voted to adopt the delisting and ADR termination conditions, thus 
making definite its intent that those conditions apply to Rule 12h-6's 
trading volume provision.
    Therefore, a foreign private issuer that, before March 21, 2007, 
delisted a class of equity securities from a national securities 
exchange or inter-dealer quotation system in the United States or 
terminated a sponsored ADR facility, may file a Form 15F in reliance on 
Rule 12h-6's trading volume provision even if, at the time of delisting 
or termination, its U.S. ADTV exceeded 5 percent of the ADTV of that 
class of securities on a worldwide basis for the preceding 12 months.
b. Alternative 300-Holder Condition
    We are adopting, substantially as reproposed, an alternative to the 
trading volume benchmark provision, which will permit a foreign private 
issuer to terminate its Exchange Act reporting obligations regarding a 
class of equity securities if it has less than 300 record holders on a 
worldwide basis or who are U.S. residents as long as the issuer meets 
the rule's other conditions.\81\ The purpose of this alternative 300-
holder condition is to enable an issuer to terminate its Exchange Act 
reporting obligations if it cannot satisfy the new trading volume 
benchmark but does meet the current 300-holder standard. Otherwise, an 
issuer could find itself worse off under Rule 12h-6 than under the 
current exit rules.\82\
---------------------------------------------------------------------------

    \81\ New Exchange Act Rule 12h-6(a)(4)(ii) (17 CFR 240.12h-
6(a)(4)(ii)).
    \82\ We did not originally propose or repropose a similar 500 
record holder condition, although one exists in the current rules 
for a small issuer with total assets that have not exceeded $10 
million for its most recent three fiscal years. Based on current 
experience, most foreign private issuers have not relied on that 
provision due to the difficulty in meeting the asset test.
---------------------------------------------------------------------------

    The adopted alternative record holder condition is substantially 
the same as the proposed and reproposed condition. Although at the 
proposing stage, some commenters requested that the Commission 
significantly raise the 300-holder threshold in both the Exchange Act 
exit and entrance rules, and a few made a similar request at the 
reproposing stage,\83\ we decline to adopt an increase to the 300-
holder threshold for foreign private issuers either in the exit or 
entrance rules at this time. As we previously stated, the limited 
purpose for retaining the 300-holder provision in the new exit rule is 
to preclude disadvantaging those companies that could terminate their 
Exchange Act reporting obligations under the current exit rules but not 
under the new trading volume condition.\84\ Moreover, since domestic 
registrants are subject to a substantially similar record holder 
standard, we believe any change would be more appropriately considered 
as part of a comprehensive evaluation of the record holder provisions 
in both the Exchange Act entrance and exit rules for both domestic and 
foreign registrants.\85\ In addition, issuers relying on the 
alternative holder provision will be able to use the revised counting 
method that we are adopting today, which should make the U.S. holder 
determination easier for those issuers.\86\
---------------------------------------------------------------------------

    \83\ See the letters from the ABA and the Organization for 
International Investment.
    \84\ See Part II.A.1.b of the Reproposing Release.
    \85\ In this regard, we note that the Advisory Committee on 
Smaller Public Companies has made recommendations relating to 
Exchange Act registration and termination of registration. See the 
Final Report of the Advisory Committee on Smaller Public Companies, 
dated April 23, 2006, which is available at http://www.sec.gov/info/smallbus/acspc/acspc-finalreport.pdf.
    \86\ See Part II.C of this release.
---------------------------------------------------------------------------

2. Prior Exchange Act Reporting Condition
    We are adopting, substantially as reproposed, a prior Exchange Act 
reporting condition that a foreign private issuer must meet before it 
can terminate its section 12(g) registration or its section 15(d) 
reporting obligations regarding a class of equity securities under Rule 
12h-6.\87\ This condition will require an issuer of equity securities 
to have had reporting obligations under section 13(a) or section 15(d) 
of the Exchange Act for at least the 12 months preceding the filing of 
Form 15F, to have filed or furnished all reports required for this 
period, and to have filed at least one annual report pursuant

[[Page 16942]]

to section 13(a) of the Exchange Act. The purpose of this prior 
Exchange Act reporting condition is to provide investors in U.S. 
securities markets with a minimum period of time to make investment 
decisions regarding a foreign private issuer's securities based on the 
information provided in an Exchange Act annual report and the interim 
home country materials furnished in English under cover of Form 6-
K.\88\
---------------------------------------------------------------------------

    \87\ New Exchange Act Rule 12h-6(a)(1) (17 CFR 240.12h-6(a)(1)).
    \88\ Under cover of a Form 6-K (17 CFR 249.306), a foreign 
private issuer is required to furnish in English a copy of any 
document that it publishes or is required to publish under the laws 
of its home country or the requirements of its local exchange or 
that it has distributed to shareholders, and which is material to an 
investment decision.
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    Originally proposed Rule 12h-6 would have required a foreign 
private issuer to have had Exchange Act reporting obligations for the 
two years preceding the filing of its Form 15F and to have filed at 
least two Exchange Act annual reports before it could terminate its 
Exchange Act reporting obligations regarding a class of equity 
securities. As previously noted, several commenters objected to this 
two year reporting condition primarily on the grounds that it would 
impose a stricter reporting requirement than is the case under the 
current exit rules.\89\ In response to those commenters, when 
reproposing Rule 12h-6, we reduced the required prior reporting period 
to at least 12 months and proposed to require only one Exchange Act 
annual report.
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    \89\ See Part II.A.2 of the Reproposing Release.
---------------------------------------------------------------------------

    We received only a few comments on the reproposed prior reporting 
condition for equity security issuers. One commenter supported the 
revisions made to the proposed prior reporting condition but urged the 
Commission to permit an issuer to terminate its Exchange Act reporting 
obligations regarding a class of equity securities even if it has not 
submitted all required Form 6-Ks.\90\ That commenter pointed to the 
difficulties that a foreign private issuer may experience when 
determining whether a Form 6-K submission is required under foreign 
reporting and U.S. materiality requirements.
---------------------------------------------------------------------------

    \90\ See the letter from the ABA.
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    As adopted, Rule 12h-6 will require a foreign private issuer to 
have submitted all Form 6-Ks required during the 12 months preceding 
the filing of its Form 15F in order to be eligible to terminate its 
reporting obligations regarding a class of equity securities. This 
requirement will help ensure that a U.S. investor is able to access 
through EDGAR \91\ and in English all material interim information 
about a foreign private issuer as required by its home country. We 
continue to believe that our rules should provide appropriate 
incentives for companies to stay current with their Exchange Act 
reporting obligations.
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    \91\ EDGAR is the Commission's Electronic Data Gathering, 
Analysis and Retrieval System.
---------------------------------------------------------------------------

    From a practical point of view, the 12-month prior reporting 
requirement should not be problematic since, based on current 
experience, most foreign companies that register securities with the 
Commission, including solely under Exchange Act section 12(g), stay in 
the U.S. market for at least a year and file at least one Exchange Act 
annual report.\92\ Moreover, the prior reporting condition will require 
that a foreign private issuer must be current in its reporting 
obligations, not that it must have timely filed all reports required 
during the 12 month period. In the event that an issuer determines that 
it should have filed a Form 6-K during this period, it can do so before 
it files its Form 15F.
---------------------------------------------------------------------------

    \92\ See, for example, the letter from Galileo.1`
---------------------------------------------------------------------------

    Another commenter \93\ requested that we permit an issuer to 
satisfy the prior Exchange Act annual report requirement by filing a 
special financial report required under Exchange Act Rule 15d-2.\94\ We 
agree that it would be appropriate to have the special financial report 
satisfy the annual report filing requirement under new Rule 12h-
6(a)(1). In this situation, an issuer will have recently sold 
securities under an effective Securities Act registration statement 
with non-financial information as current as the date of the 
prospectus, and the information in the special financial report will 
provide financial statements and other information as of and for the 
most recent fiscal year end, thus serving the same purpose as an 
Exchange Act annual report.
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    \93\ See the letter from Sullivan & Cromwell.
    \94\ 17 CFR 240.15d-2. This rule requires an issuer that filed a 
Securities Act registration statement, which did not contain audited 
financial statements for the last full fiscal year preceding the 
year in which the registration statement became effective, to file a 
special financial report with the Commission that includes audited 
financials for that last full fiscal year.
---------------------------------------------------------------------------

    In addition, this approach is consistent with our recent 
implementation rules for the internal control over financial reporting 
requirements mandated by Section 404 of the Sarbanes-Oxley Act of 
2002.\95\ Accordingly, we are clarifying that a special financial 
report, filed with the Commission pursuant to Rule 15d-2, constitutes 
an Exchange Act annual report for the purpose of complying with Rule 
12h-6's prior reporting condition.
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    \95\ 15 U.S.C. 7262. See Release No. 33-8760 (December 15, 
2006), 71 FR 76580 (December 21, 2006).
---------------------------------------------------------------------------

3. One Year Dormancy Condition
    We are adopting, as reproposed, a one year dormancy condition with 
which a foreign private issuer must comply before it can terminate its 
Exchange Act registration and reporting obligations regarding a class 
of equity securities under Rule 12h-6.\96\ New Rule 12h-6 will prohibit 
sales of a foreign private issuer's securities in the United States in 
a registered offering under the Securities Act during the 12 months 
preceding the filing of its Form 15F other than securities issued:
---------------------------------------------------------------------------

    \96\ New Exchange Act Rule 12h-6(a)(2) (17 CFR 240.12h-6(a)(2)).
---------------------------------------------------------------------------

     to the issuer's employees;
     by selling security holders in non-underwritten offerings;
     upon the exercise of outstanding rights granted by the 
issuer if the rights are granted pro rata to all existing security 
holders of the class of the issuer's securities to which the rights 
attach;
     pursuant to a dividend or interest reinvestment plan; or
     upon the conversion of outstanding convertible securities 
or upon the exercise of outstanding transferable warrants issued by the 
issuer.
    The primary purpose of the dormancy condition's prohibition of 
registered offerings is to preclude a foreign private issuer from 
exiting the Exchange Act reporting system shortly after it has engaged 
in U.S. public capital raising.
    We received relatively few comments on the reproposed dormancy 
condition.\97\ Most welcomed the revisions made to the originally 
proposed dormancy condition.\98\ For example, the originally proposed 
rule would have prohibited sales of unregistered securities, with 
limited exceptions. We removed this prohibition when reproposing Rule 
12h-6 after commenters convinced us that adoption of the originally 
proposed dormancy condition could well drive many private placement 
financings and other unregistered offerings by foreign companies 
offshore, to the detriment of U.S. investors and U.S. broker-dealers, 
since many companies might prefer to finance outside the United States 
under Regulation S in order to avoid triggering the dormancy condition. 
Consequently, as reproposed, the adopted rule will permit the 
unregistered sale of securities that are exempted under the Securities

[[Page 16943]]

Act during the dormancy period. The permitted category of securities 
will include sales pursuant to section 4(2),\99\ Regulation D,\100\ 
Rule 144A,\101\ Rules 801 and 802,\102\ and exempt securities under 
section 3, including section 3(a)(10) of the Securities Act.\103\
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    \97\ See the letters from the ABA, Linklaters, the N.Y. State 
Bar, Sullivan & Cromwell, and Skadden Arps.
    \98\ See the letters from the ABA, Skadden Arps, and Sullivan & 
Cromwell.
    \99\ 15 U.S.C. 77d(2).
    \100\ 17 CFR 230.501 et seq.
    \101\ 17 CFR 230.144A.
    \102\ 17 CFR 230.801 and 230.802.
    \103\ 15 U.S.C. 77c and 77c(a)(10).
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    Some of the comments pertained to additional proposed exceptions to 
the dormancy condition. As originally proposed, Rule 12h-6 would have 
excepted from the dormancy condition's prohibition of sales of an 
issuer's registered securities in the United States only securities 
sold to an issuer's employees and those sold by selling security 
holders in non-underwritten offerings. When reproposing Rule 12h-6, we 
proposed three additional exceptions to the dormancy condition's 
prohibition of sales of an issuer's registered securities: the issuance 
of registered securities pursuant to pro rata rights offerings, 
dividend or interest reinvestment plans, and the conversion of 
outstanding convertible securities.\104\ Like the earlier proposed 
exceptions, these transactions often occur for reasons unrelated to 
capital raising or for the benefit of the issuer, for example, to 
benefit current security holders or for the convenience of investors.
---------------------------------------------------------------------------

    \104\ See Part II.A.3 of the Reproposing Release.
---------------------------------------------------------------------------

    We also reproposed that these additional exceptions would not apply 
to securities issued pursuant to a standby underwritten offering or 
other similar arrangement in the United States. As we explained, this 
limitation is consistent with the Commission's previous treatment of 
these types of registered offerings.\105\
---------------------------------------------------------------------------

    \105\ Instruction 2 to Item 8 of Form 20-F imposes a similar 
limitation.
---------------------------------------------------------------------------

    Two commenters requested that we clarify that an issuer would not 
trigger the dormancy condition if it conducted a registered offering 
involving, for example, a rights offering, in the United States, with a 
standby underwriting arrangement according to which the underwriter 
only resold the securities purchased in the offering outside the United 
States pursuant to Regulation S.\106\ We agree that this type of 
standby underwritten arrangement would not trigger the dormancy 
condition since it would not increase an issuer's involvement in public 
capital raising in the United States.
---------------------------------------------------------------------------

    \106\ See the letters from Linklaters and the N.Y. State Bar.
---------------------------------------------------------------------------

    Also as reproposed, the adopted rule includes under the dormancy 
condition sales of an issuer's securities by its selling security 
holders in an underwritten registered offering because there is a 
greater likelihood of issuer involvement in a U.S. underwritten 
offering than in a non-underwritten offering of selling security 
holders.
    New Exchange Act Rule 12h-6 will use the definition of ``employee'' 
under Form S-8 \107\ for the purpose of applying the dormancy condition 
under Rule 12h-6, as reproposed.\108\ That definition includes any 
employee, director, general partner, certain trustees, certain 
insurance agents, and former employees as well as executors, 
administrators or beneficiaries of the estates of deceased employees, 
and a family member of an employee who has received shares through a 
gift or domestic relations order.\109\ Otherwise, a narrow 
interpretation of the term ``employee'' could result in an issuer being 
disqualified from terminating its Exchange Act registration and 
reporting obligations under Rule 12h-6 because it engaged in a sale of 
securities during the dormancy period to an employee's family member or 
other relationship permitted under Form S-8 but not explicitly allowed 
under the new rule.
---------------------------------------------------------------------------

    \107\ 17 CFR 239.16b. Form S-8 is the form used by an Exchange 
Act reporting company to register securities for issuance to its 
employees or those of its subsidiaries or parent under an employee 
benefit plan.
    \108\ New Exchange Act Rule 12h-6(f)(2) (17 CFR 240.12h-
6(f)(2)).
    \109\ See General Instruction A.1 to Form S-8.
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4. Foreign Listing Condition
    We are adopting a foreign listing condition under Rule 12h-6, which 
will require that, with respect to equity securities, for at least the 
12 months preceding the filing of its Form 15F, a foreign private 
issuer must have maintained a listing of the subject class of 
securities on one or more exchanges in a foreign jurisdiction that, 
either singly or together with the trading of the same class of the 
issuer' s securities in another foreign jurisdiction, constitutes the 
primary trading market for the issuer's subject class of 
securities.\110\ The new rule defines ``primary trading market'' to 
mean that at least 55 percent of the trading in the foreign private 
issuer's subject class of securities took place in, on or through the 
facilities of a securities market or markets in no more than two 
foreign jurisdictions during a recent 12-month period.\111\ That 
definition further provides that if an issuer aggregates the trading of 
its securities in two foreign jurisdictions for the purpose of Rule 
12h-6's foreign listing condition, the trading for the issuer's 
securities in at least one of the two foreign jurisdictions must be 
larger than the trading in the United States for the same class of the 
issuer's securities.\112\
---------------------------------------------------------------------------

    \110\ New Exchange Act Rule 12h-6(a)(3) (17 CFR 240.12h-
6(a)(3)).
    \111\ New Exchange Act Rule 12h-6(f)(5)(i) (17 CFR 240.12h-
6(f)(5)(i)). Rule 12h-6 defines ``recent 12-month period'' to mean a 
12-calendar month period that ended no more than 60 days before the 
filing date of the Form 15F. New Exchange Act Rule 12h-6(f)(6) (17 
CFR 240.12h-6(f)(6)).
    \112\ New Exchange Act Rule 12h-6(f)(5)(ii) (17 CFR 240.12h-
6(f)(5)(ii)). As proposed and as adopted, measurement under this 
condition is by reference to average daily trading volume (ADTV) as 
reported by the relevant market. Although the proposing and 
reproposing releases noted that there are differences concerning how 
various markets measure and report trading volume (for example, 
dealer markets versus auction markets), no commenter supported a 
trading volume standard that would take such differences into 
account.
---------------------------------------------------------------------------

    The purpose of this foreign listing condition is to help assure 
that there is a non-U.S. jurisdiction that principally regulates and 
oversees the issuance and trading of the issuer's securities and the 
issuer's disclosure obligations to investors. This foreign listing 
condition increases the likelihood that the principal pricing 
determinants for a foreign private issuer's securities are located 
outside the United States, and makes more likely the availability of a 
set of non-U.S. securities disclosure documents to which a U.S. 
investor may turn for material information when making investment 
decisions about the issuer's securities following the termination of 
its disclosure obligations under Rule 12h-6. If the United States was 
the sole or principal market for the foreign private issuer's 
securities, then the Commission would have a greater regulatory 
interest in continuing to subject the foreign company to the Exchange 
Act reporting regime.
    The adopted foreign listing condition is substantially the same as 
the reproposed condition, except that, at the request of commenters, we 
have modified the rule to reflect that an issuer may be listed on 
multiple exchanges within a single jurisdiction.\113\ Thus, the new 
rule provides that an issuer may aggregate trading in the same class of 
its equity securities on all of its exchanges within a single foreign 
jurisdiction or in no more than two foreign jurisdictions for the 
purpose of the foreign listing condition, as long as the trading in one 
of the foreign jurisdictions is greater than the trading in the United 
States.\114\
---------------------------------------------------------------------------

    \113\ See, for example, the letter from Cravath.
    \114\ For the purpose of the primary trading market 
determination, an issuer would measure the ADTV of on-exchange 
transactions in its securities aggregated over one or two foreign 
jurisdictions against its worldwide trading volume. The issuer could 
include in this measure off-exchange transactions in those 
jurisdictions comprising the numerator only if it includes those 
off-exchange transactions when calculating worldwide trading volume 
in the denominator. This denominator would be the same as the 
denominator used for the trading volume benchmark. Thus, this 
denominator would consist of U.S. ADTV, which must include both on-
exchange and off-exchange transactions, and non-U.S. ADTV, which 
must include on-exchange transactions, but could also include off-
exchange transactions. See Part II.A.1.a.ii of this release.

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[[Page 16944]]

    We received relatively few comments on the reproposed foreign 
listing condition.\115\ Three commenters generally approved of the 
changes made to the originally proposed foreign listing condition.\116\ 
These changes included shortening the proposed foreign listing 
requirement from two years to one year and permitting an issuer to 
aggregate its trading on an exchange in one foreign jurisdiction with 
that in a second foreign jurisdiction.\117\ These commenters agreed 
that the reproposed foreign listing condition would increase the 
flexibility of the new rule for foreign private issuers while serving 
to protect investors.
---------------------------------------------------------------------------

    \115\ See the letters from the ABA, BusinessEurope, Cravath, 
Davis Polk, Linklaters, and Skadden Arps.
    \116\ See the letters from the ABA, Linklaters, and Skadden 
Arps.
    \117\ See Part II.A.4 of the Reproposing Release.
---------------------------------------------------------------------------

    New Rule 12h-6's foreign listing condition will apply to any issuer 
of equity securities, whether that issuer is relying on the trading 
volume benchmark or the alternative holder provision, as reproposed. 
Some commenters requested that the Commission not apply the foreign 
listing condition to an issuer that has delisted in its primary trading 
market as a result of being acquired. According to these commenters, 
that issuer would not be able to terminate its Exchange Act reporting 
obligations under the 300-holder provision because it could not meet 
the foreign listing requirement.\118\
---------------------------------------------------------------------------

    \118\ See the letters from BusinessEurope and Davis Polk.
---------------------------------------------------------------------------

    The foreign listing condition is an important component of the new 
exit regime because it increases the likelihood that U.S. investors 
will have a set of material disclosure documents about an issuer to 
which they may turn following that issuer's exit from the Exchange Act 
reporting system. Therefore, we decline to create an exception from 
this condition for any issuer at this time.\119\ We note that, under 
most circumstances, a foreign private issuer that has been acquired may 
exit the Exchange Act reporting regime under the provisions of the 
current exit rules that permit any issuer, whether domestic or foreign, 
or listed or unlisted, to file a Form 15 if its securities are held by 
less than 300 holders of record.\120\
---------------------------------------------------------------------------

    \119\ For this reason, we decline to adopt a general exception 
from the foreign listing condition for equity securities issuers 
proceeding under the alternative 300-holder provision.
    \120\ Exchange Act Rules 12g-4(a)(1)(i) and 12h-3(b)(1)(i) (17 
CFR 240.12g-4(a)(1)(i) and 240.12h-3(b)(1)(i)).
---------------------------------------------------------------------------

B. Debt Securities Provision

    As adopted, Rule 12h-6 will enable a foreign private issuer to 
terminate its Exchange Act reporting obligations regarding a class of 
debt securities as long as the issuer has filed or furnished all 
reports required under Exchange Act section 13(a) or section 15(d), 
including at least one Exchange Act annual report, and has its class of 
debt securities held of record by less than 300 holders either on a 
worldwide basis or who are U.S. residents.\121\ This provision reflects 
the minimum reporting requirement and current 300 holder standard under 
section 15(d) and Rule 12h-3. Moreover, it is the same as the 
reproposed debt securities provision.\122\
---------------------------------------------------------------------------

    \121\ New Exchange Act Rule 12h-6(c) (17 CFR 240.12h-6(c)).
    \122\ As originally proposed and reproposed, the adopted exit 
rule for debt securities does not include a provision comparable to 
Rule 12h-3's 500 record holder provision because most foreign 
private issuers that are debt securities registrants would likely 
exceed the $10 million asset threshold that accompanies the 500 
record holder standard. No commenter has ever requested that we 
incorporate the 500 record holder and $10 million asset standard 
into Rule 12h-6's debt securities provision, either at the proposing 
or reproposing stage.
---------------------------------------------------------------------------

    Some commenters requested that we revise the 300-holder standard 
for termination of a foreign private issuer's Exchange Act reporting 
obligations under Exchange Act Section 15(d) regarding a class of debt 
securities that had been offered and sold pursuant to an effective 
registration statement under the Securities Act.\123\ In the view of 
most of these commenters, an increase to at least 1,000 holders would 
be appropriate in light of the changes in the global securities markets 
since the 300-holder standard was adopted by Congress in the 
1960s.\124\
---------------------------------------------------------------------------

    \123\ See the letters from Cleary Gottlieb, EALIC, Davis Polk, 
and the EU.
    \124\ Davis Polk favored an increase to at least 3,000.
---------------------------------------------------------------------------

    We are not revising the 300-holder standard as it applies to debt 
securities. While we agree that there have been substantial changes in 
the global capital markets, no commenter has presented us with data or 
other information that supports raising the threshold from that adopted 
by Congress. In addition, the problems associated with determining the 
ownership of equity securities do not appear to apply to debt 
securities, as to which there is generally a single U.S.-based transfer 
agent. Further, the same 300-holder threshold applies to U.S. 
companies, and unlike the situation for equity securities, no commenter 
has addressed why it would be appropriate to treat U.S. and foreign 
registrants differently with respect to the termination or suspension 
of reporting obligations under section 15(d) as applied to debt 
securities.\125\
---------------------------------------------------------------------------

    \125\ We note that foreign private issuers that avail themselves 
of Rule 12h-6 will be able to terminate their reporting obligations 
under section 15(d) while U.S. companies will only continue to be 
able to suspend their reporting obligations pursuant to Rule 12h-3 
and section 15(d).
---------------------------------------------------------------------------

C. Revised Counting Method

    We are adopting, as reproposed, Rule 12h-6's revised counting 
method, which will enable an issuer of equity securities proceeding 
under the alternative 300-holder provision, or a debt securities 
issuer, to use a modified version of the ``look through'' counting 
method under Rule 12g3-2(a) when determining the number of its U.S. 
resident security holders.\126\ Instead of having to look through the 
accounts of brokers, banks and other nominees on a worldwide basis to 
determine the number of its U.S. resident holders, as is required under 
the current rules, a foreign private issuer could limit its inquiry to 
brokers, banks and other nominees located in the United States, the 
issuer's jurisdiction of incorporation, legal organization or 
establishment and, if different, the jurisidiction of its primary 
trading market.\127\ This revised counting method is substantially 
similar to the counting method that the Commission adopted under the 
exemptive rules for cross-border rights offerings, exchange offers and 
business combinations,\128\ as well as under the definition of foreign 
private issuer.\129\
---------------------------------------------------------------------------

    \126\ New Exchange Act Rule 12h-6(e) (17 CFR 240.12h-6(e)).
    \127\ New Exchange Act Rule 12h-6(e)(1) (17 CFR 240.12h-
6(e)(1)).
    \128\ Securities Act Rules 800 et seq. (17 CFR 230.800 et seq.).
    \129\ 17 CFR 230.405 and 240.3b-4(c).
---------------------------------------------------------------------------

    Like the reproposed rule, the adopted counting method provision 
requires an issuer that aggregates the trading volume of its securities 
in two foreign jurisdictions for the purpose of meeting Rule 12h-6's 
foreign listing condition to look through nominee accounts in both 
foreign jurisdictions, which comprise its primary trading market, and 
in the United States as well as in its jurisdiction of incorporation or 
organization, if different from the two jurisdictions that comprise its 
primary

[[Page 16945]]

trading market.\130\ Also as reproposed, the adopted counting method 
provision permits an issuer to rely on the assistance of an independent 
information services provider when calculating the number of its U.S. 
security holders.\131\
---------------------------------------------------------------------------

    \130\ New Exchange Act Rule 12h-6(e)(1)(ii) (17 CFR 240.12h-
6(e)(1)(ii)).
    \131\ New Exchange Act Rule 12h-6(e)(4) (17 CFR 240.12h-
6(e)(4)).
---------------------------------------------------------------------------

    We are also adopting a presumption, included in both the originally 
proposed and reproposed counting method provisions, that we previously 
adopted under the cross-border rules and definition of foreign private 
issuer.\132\ This presumption is that, if, after reasonable inquiry, an 
issuer is unable without unreasonable effort to obtain information 
about the amount of securities held by nominees for the accounts of 
customers resident in the United States, it may assume that the 
customers are the residents of the jurisdiction in which the nominee 
has its principal place of business.\133\
---------------------------------------------------------------------------

    \132\ See Securities Act Rule 800(h)(4) (17 CFR 230.800(h)(4)) 
and Instruction B to Exchange Act Rule 3b-4(c)(1) (17 CFR 240.3b-
4(c)(1)).
    \133\ New Exchange Act Rule 12h-6(e)(2) (17 CFR 240.12h-
6(e)(2)).
---------------------------------------------------------------------------

    The reproposed rule provided that an issuer must count securities 
as owned by U.S. holders when publicly filed reports of beneficial 
ownership or information that is otherwise provided to it indicates 
that the securities are held by U.S. residents. One commenter requested 
that we clarify that an issuer is not required to take account of U.S. 
ownership information provided to it if the issuer determines that it 
is unreliable.\134\ We have so clarified by revising the above 
provision to state that an issuer must count securities as owned by 
U.S. holders when publicly filed reports of beneficial ownership or 
other reliable information that is provided to it indicates that the 
securities are held by U.S. residents.\135\
---------------------------------------------------------------------------

    \134\ See the letter from Cravath.
    \135\ New Rule 12h-6(e)(3) (17 CFR 240.12h-6(e)(3)).
---------------------------------------------------------------------------

    Some foreign jurisdictions have laws that provide an established 
and enforceable means for a public company to obtain information about 
its shareholders.\136\ Like the reproposed rule, Rule 12h-6 does not 
provide that a foreign private issuer may rely solely on specified 
foreign statutory or code provisions when calculating the number of its 
U.S. resident equity or debt holders. We received only two comments in 
support of such a provision at the proposing stage, and none at the 
reproposing stage. However, as we noted in the reproposing release, as 
part of its inquiry regarding whether it meets any of the quantitative 
benchmarks under Rule 12h-6, an issuer may refer to shareholder 
information obtained pursuant to those foreign statutory or code 
provisions to the extent that this shareholder information is 
reasonably reliable and accurate and furthers the purpose of the 
inquiry.
---------------------------------------------------------------------------

    \136\ See, for example, section 212 of the United Kingdom 
Companies Act.
---------------------------------------------------------------------------

D. Expanded Scope of Rule 12h-6

    We are adopting, substantially as reproposed, an expansion of the 
scope of the originally proposed Rule 12h-6 in two respects. First, we 
are adopting a rule providing that an issuer that has succeeded to the 
Exchange Act reporting obligations of an acquired company may terminate 
those reporting obligations under Rule 12h-6 as long as it satisfies 
specified conditions. Second, we are extending the application of Rule 
12h-6 to a foreign private issuer that previously filed a Form 15 and 
effected its termination of registration or suspension of reporting 
under the current exit rules before the effective date of Rule 12h-6, 
subject to conditions.
1. Application of Rule 12h-6 to Successor Issuers
    As adopted, Exchange Act Rule 12h-6(d) \137\ provides that, 
following a merger, consolidation, exchange of securities, acquisition 
of assets or otherwise, a foreign private issuer that has succeeded to 
the registration of a class of securities under Exchange Act section 
12(g) pursuant to Rule 12g-3,\138\ or to the reporting obligations of 
another issuer under Exchange Act section 15(d) pursuant to Rule 15d-
5,\139\ may file a Form 15F to terminate those reporting obligations 
if, regarding a class of equity securities, the successor issuer meets 
the conditions under Rule 12h-6(a), which applies to equity securities 
issuers.\140\ Regarding a class of debt securities, the successor 
issuer must meet the conditions under Rule 12h-6(c), including the 
reporting condition.\141\ New Rule 12h-6(d) then provides that, when 
determining whether it meets the prior reporting condition under either 
the equity or debt securities provision of the final rule, a successor 
issuer may take into account the reporting history of the issuer whose 
reporting obligations it has assumed pursuant to Rule 12g-3 or 15d-
5.\142\
---------------------------------------------------------------------------

    \137\ 17 CFR 240.12h-6(d).
    \138\ 17 CFR 240.12g-3.
    \139\ 17 CFR 240.15d-5.
    \140\ New Exchange Act Rule 12h-6(d)(1)(i) (17 CFR 240.12h-
6(d)(1)(i)).
    \141\ New Exchange Act Rule 12h-6(d)(1)(ii) (17 CFR 240.12h-
6(d)(1)(ii)).
    \142\ New Exchange Act Rule 12h-6(d)(2) (17 CFR 240.12h-
6(d)(2)).
---------------------------------------------------------------------------

    This successor issuer provision will enable a non-Exchange Act 
reporting foreign private issuer that acquires a reporting foreign 
private issuer in a transaction exempt under the Securities Act, for 
example, under Rule 802 or section 3(a)(10), to qualify immediately for 
termination of its Exchange Act reporting obligations under Rule 12h-6, 
without having to file an Exchange Act annual report, as long as the 
successor issuer meets the rule's foreign listing, dormancy and 
quantitative benchmark conditions, and the acquired company's reporting 
history fulfills Rule 12h-6's prior reporting condition. Since the 
successor issuer will have assumed the acquired company's Exchange Act 
reporting obligations, we believe it is appropriate that the issuer 
succeed to the acquired company's reporting history for the purpose of 
Rule 12h-6.
    The adopted successor issuer provision is substantially similar to 
the reproposed provision, except that the adopted rule clarifies that, 
in order to qualify for deregistration under the successor issuer 
provision, an issuer must meet all of the conditions pertaining to 
equity securities registrants, including the dormancy condition. We 
have made this clarification in order to underscore our position, 
stated at the reproposing stage, that if a previously non-Exchange Act 
reporting foreign private issuer acquires an Exchange Act reporting 
company by consummating an exchange offer, merger or other business 
combination registered under the Securities Act, most likely on a Form 
F-4 registration statement, the acquiror will have to fulfill Rule 12h-
6's prior reporting condition without reference to the acquired 
company's reporting history. Since the acquiror will have triggered its 
own section 15(d) reporting obligations upon the effectiveness of its 
Securities Act registration statement, it will have to meet Rule 12h-
6's full reporting condition like any other section 15(d) reporting 
company before it can terminate its reporting obligations under the new 
rule. In order to clarify that such a Securities Act registrant may not 
proceed under the successor issuer provision and immediately terminate 
its section 15(d) reporting obligations upon completion of the Form F-4 
transaction, the adopted rule provides that an issuer must meet Rule 
12h-6's equity

[[Page 16946]]

securities conditions, which includes the dormancy condition.\143\
---------------------------------------------------------------------------

    \143\ Because some commenters stated that the dormancy condition 
should not apply to a foreign private issuer that filed a Securities 
Act registration statement solely to effect an acquisition or 
business combination (see, for example, the letter from Sullivan & 
Cromwell), we believe it is necessary to state explicitly in Rule 
12h-6 that the dormancy condition applies to a successor issuer.
---------------------------------------------------------------------------

    Most of the parties that commented on the reproposed successor 
issuer provision supported it.\144\ However, one commenter sought 
clarification regarding the intended role that the predecessor company 
would play in satisfying Rule 12h-6's requirements.\145\ More 
particularly, this commenter was concerned that Rule 12h-6 could be 
construed to require an issuer to take into account the listing and 
trading history of an acquired company. Such an interpretation could 
preclude an acquiror from terminating its Exchange Act reporting 
obligations immediately after succession if the acquired company was 
unlisted or had an active U.S. trading market.
---------------------------------------------------------------------------

    \144\ See, for example, the letters from Cleary Gottlieb and 
PricewaterhouseCoopers.
    \145\ See the letter from Latham & Watkins.
---------------------------------------------------------------------------

    Therefore, we are clarifying that Rule 12h-6(d) permits a successor 
issuer to consider an acquired company's history only when determining 
whether the successor meets Rule 12h-6's prior reporting condition. 
Following an acquisition, a successor issuer must look only to its own 
foreign listing history, and consider its own U.S. and worldwide 
trading volume, when determining whether it satisfies Rule 12h-6's 
foreign listing and trading volume conditions.
    This commenter also sought clarification regarding whether, as a 
condition to deregistration under Rule 12h-6, a successor issuer would 
have an obligation under Exchange Act Rule 12g-3(g)\146\ to file an 
Exchange Act annual report for the predecessor's last full fiscal year 
prior to succession. As with the filing of a Form 15 under the current 
exit rules, under Rule 12h-6(g),\147\ the suspension of a foreign 
private issuer's duty to file reports under section 13(a) or 15(d) 
occurs immediately upon filing a Form 15F. This suspension extends to 
an annual report that would be required under Rule 12g-3(g). A 
successor issuer would only have to file an annual report on behalf of 
its predecessor under Rule 12g-3(g) if, at the time of filing its Form 
15F, that annual report was past due. This is consistent with the 
current practice involving Form 15.
---------------------------------------------------------------------------

    \146\ 17 CFR 240.12g-3(g). This provision requires a successor 
issuer to file an Exchange Act annual report for the last full 
fiscal year of the predecessor before the issuer's succession if the 
predecessor has not done so.
    \147\ 17 CFR 240.12h-6(g).
---------------------------------------------------------------------------

2. Application of Rule 12h-6 to Prior Form 15 Filers
    As adopted, Rule 12h-6(i) will extend termination of Exchange Act 
reporting under the new exit rule to a foreign private issuer that, 
before the effective date of Rule 12h-6, already effected the 
suspension or termination of its Exchange Act reporting obligations 
after filing a Form 15.\148\ A prior Form 15 filer will have to meet 
the following conditions in order to obtain the benefits of Rule 12h-6 
with respect to a class of equity securities:
---------------------------------------------------------------------------

    \148\ New Exchange Act Rule 12h-6(i)(1) (17 CFR 240.12h-
6(i)(1)). A former section 15(d) reporting company would benefit 
from proceeding under Rule 12h-6 by obtaining termination, rather 
than mere suspension, of its reporting obligations with respect to a 
class of equity or debt securities. As discussed below, a former 
section 12(g) company also would benefit from proceeding under Rule 
12h-6 by being able to claim the Rule 12g3-2(b) exemption 
immediately upon the effectiveness of its Rule 12h-6 termination.
---------------------------------------------------------------------------

     the issuer must satisfy Rule 12h-6's foreign listing 
condition regarding the class of equity securities that was the subject 
of its Form 15;
     the issuer must satisfy either Rule 12h-6's trading volume 
or alternative holder provision; and
     the issuer must file a Form 15F.\149 \
---------------------------------------------------------------------------

    \149\ Rule 12h-6(i)(2)(i) (17 CFR 240.12h-6(i)(2)(i)).
---------------------------------------------------------------------------

    An equity securities issuer will not have to satisfy Rule 12h-6's 
prior reporting or dormancy provisions since it will already be a non-
reporting entity.
    A prior Form 15 filer will have to meet the following conditions in 
order to obtain the benefits of Rule 12h-6 with respect to a class of 
debt securities:
     the issuer must meet Rule 12h-6's record holder provision 
for debt securities; and
     the issuer must file a Form 15F.\150\
---------------------------------------------------------------------------

    \150\ Rule 12h-6(i)(2)(ii) (17 CFR 240.12h-6(i)(2)(ii)).
---------------------------------------------------------------------------

    As reproposed, the prior Form 15 filer provision was substantially 
similar to the adopted rule, except that we proposed to establish, as a 
condition of eligibility, that an issuer not be required to register a 
class of securities under section 12(g) or be required to file reports 
under section 15(d).\151\ While the parties that commented on the 
reproposed provision supported extending the benefits of Rule 12h-6 to 
a prior Form 15 filer, most also opposed requiring that filer to 
determine that it had not assumed or resumed Exchange Act reporting 
obligations.\152\ Those commenters noted that, since under the 
reproposed rule, a former equity securities registrant could not have 
relied on the trading volume condition, that registrant would have had 
once more to undertake the costly task of counting its U.S. resident 
holders.
---------------------------------------------------------------------------

    \151\ See Part II.D.2 of the Reproposing Release.
    \152\ See the letters from the ABA, BusinessEurope, Cleary 
Gottlieb, EALIC, the EU, the N.Y. State Bar, and Sullivan & 
Cromwell.
---------------------------------------------------------------------------

    We agree that, as suggested by some of those commenters, a more 
equitable approach would be to place former equity securities 
registrants in as good a position as current registrants by permitting 
them to meet the trading volume benchmark as an alternative to the 
record holder standard.\153\ The adopted rule takes this approach.
---------------------------------------------------------------------------

    \153\ See, for example, the letters from EALIC and Sullivan & 
Cromwell.
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E. Public Notice Requirement

    We are adopting, as reproposed, a public notice requirement as a 
condition to termination of reporting under Rule 12h-6, except for 
prior Form 15 filers.\154\ Pursuant to this requirement, an issuer of 
equity or debt securities, including a successor issuer, will have to 
publish, either before or on the date that it files its Form 15F, a 
notice in the United States that discloses its intent to terminate its 
section 13(a) or 15(d) reporting obligations. The issuer must publish 
the notice, such as a press release, through a means reasonably 
designed to provide broad dissemination of the information to the 
public in the United States. The issuer also must submit a copy of the 
notice, either under cover of a Form 6-K before or at the time of 
filing of the Form 15F, or as an exhibit to the Form 15F. The primary 
purpose of this notice provision is to alert U.S. investors who have 
purchased the issuer's securities about the issuer's intended exit from 
the Exchange Act registration and reporting system.
---------------------------------------------------------------------------

    \154\ New Exchange Act Rule 12h-6(h) (17 CFR 240.12h-6(h)).
---------------------------------------------------------------------------

    The notice requirement will not apply to a prior Form 15 filer that 
files a Form 15F to terminate its registration and reporting 
obligations under Rule 12h-6(i). Since a prior Form 15 filer will 
already have ceased its Exchange Act reporting obligations, investors 
would gain little from the publishing of such a notice.
    One commenter requested that we clarify that an issuer may satisfy 
this notice provision by having the press release disseminated in the 
United States by one of the international wire services, such as those 
operated by U.S. and international financial publications.\155\ We have 
so clarified by revising Form 15F to request that the issuer identify 
the means, such as publication in a particular newspaper or 
transmission by a particular wire

[[Page 16947]]

service, used to disseminate the notice in the United States.\156\
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    \155\ See the letter from Skadden Arps.
    \156\ See Item 7.B of Form 15F.
---------------------------------------------------------------------------

F. Form 15F

    Like our current exit rules, adopted Rule 12h-6 will require a 
foreign private issuer to file electronically on EDGAR a form 
certifying that it meets the requirements for ceasing its Exchange Act 
reporting obligations.\157\ By signing and filing new Form 15F,\158\ a 
foreign private issuer will be certifying that:
---------------------------------------------------------------------------

    \157\ New Exchange Act Rule 12h-6(a).
    \158\ 17 CFR 249.324.
---------------------------------------------------------------------------

     it meets all of the conditions for termination of Exchange 
Act reporting specified in Rule 12h-6; and
     there are no classes of securities other than those that 
are the subject of the Form 15F regarding which the issuer has Exchange 
Act reporting obligations.\159\
---------------------------------------------------------------------------

    \159\ Form 15F General Instruction B.
---------------------------------------------------------------------------

    Unlike current Form 15, new Form 15F will require a foreign private 
issuer to provide disclosure regarding several items in order to 
provide investors with information regarding an issuer's decision to 
terminate its Exchange Act reporting obligations. The information will 
also assist Commission staff in assessing the use of Rule 12h-6. The 
Form 15F filing requirement and the specified items of information are 
substantially the same as those under reproposed Rule 12h-6, except 
that we have modified some items to conform to the changes we have made 
to the reproposed rule.
    As with Form 15, and as originally proposed and reproposed, filing 
of new Form 15F will immediately suspend an issuer's Exchange Act 
reporting obligations regarding the subject class of securities and 
commence a 90-day waiting period. If, at the end of this 90-day period, 
the Commission has not objected to the filing, the suspension will 
automatically become a termination of registration and reporting. If 
the Commission denies the Form 15F or the issuer withdraws it, within 
60 days of the date of the denial or withdrawal, the issuer will be 
required to file or submit all reports that would have been required 
had it not filed the Form 15F.\160\
---------------------------------------------------------------------------

    \160\ New Exchange Act Rule 12h-6(g) (17 CFR 240.12h-6(g)).
---------------------------------------------------------------------------

    After filing Form 15F, an issuer will have no continuing obligation 
to make inquiries or perform other work concerning the information 
contained in the Form 15F, including its assessment of trading volume 
or ownership of its securities. However, Form 15F will require an 
issuer to undertake to withdraw its Form 15F before the date of 
effectiveness if it has actual knowledge of information that causes it 
reasonably to believe that, at the date of filing the Form 15F:
     the average daily trading volume of its subject class of 
securities in the United States exceeded 5 percent of the average daily 
trading volume of that class of securities on a worldwide basis for the 
same recent 12-month period that the issuer used for purposes of Rule 
12h-6(a)(4)(i);
     its subject class of securities was held of record by 300 
or more United States residents or 300 or more persons worldwide, if 
proceeding under Rule 12h-6(a)(4)(ii) or Rule 12h-6(c); or
     it otherwise did not qualify for termination of its 
Exchange Act reporting obligations under Rule 12h-6.\161\
---------------------------------------------------------------------------

    \161\ Form 15F Item 11.
---------------------------------------------------------------------------

    This undertaking is substantially the same as that required under 
the reproposed rule and form, except that, in the first prong of the 
reproposed rule's undertaking, we referred to trading volume ``during a 
recent 12-month period.'' At the request of a commenter,\162\ we have 
clarified that the undertaking applies to an issuer relying on the 
trading volume provision only when it learns that its trading volume 
exceeded the 5 percent threshold for the same recent 12-month period 
that the issuer used for purposes of Rule 12h-6's trading volume 
provision.
---------------------------------------------------------------------------

    \162\ See the letter from Cleary Gottlieb.
---------------------------------------------------------------------------

G. Amended Rules 12g-4 and 12h-3

    Although similar to the current 300 record holder standard, Rule 
12h-6's alternative record holder condition for equity securities and 
its debt securities provision will offer advantages compared to the 
current exit rules. As adopted, Rule 12h-6's revised counting method 
will limit the jurisdictions in which a foreign private issuer must 
search for records of its U.S. resident holders. Moreover, Rule 12h-6 
will enable a foreign private issuer to terminate, rather than merely 
suspend, its section 15(d) reporting obligations regarding a class of 
equity or debt securities. In addition, under Rule 12h-6, a foreign 
private issuer will be able to claim the benefits of the Rule 12g3-2(b) 
exemption immediately upon the effectiveness of its termination of 
reporting regarding a class of equity securities under section 12(g) or 
15(d). In each instance, once its termination of reporting becomes 
effective under Rule 12h-6, an issuer will no longer have to concern 
itself with whether the number of its U.S. resident or worldwide 
holders of the class of subject securities has risen above the 
statutory or regulatory threshold.
    Given these advantages, we continue to believe that, following the 
adoption of Rule 12h-6, few, if any, foreign private issuers will elect 
to proceed under the provisions of Rule 12g-4 or Rule 12h-3 that allow 
a foreign private issuer to terminate its registration of a class of 
securities under section 12(g) or suspend the duty to file reports 
under section 15(d) if the class of securities is held by less than 300 
U.S. residents or by 500 U.S. residents and the issuer has had total 
assets not exceeding $10 million on the last day of each of its most 
recent three fiscal years.\163\ Accordingly, we are adopting the 
amendments to eliminate these provisions in Rules 12g-4 and 12h-3, as 
reproposed.
---------------------------------------------------------------------------

    \163\ See Exchange Act Rules 12g-4(a)(2) and 12h-3(b)(2) (17 CFR 
240.12g-4(a)(2) and 12h-3(b)(2)).
---------------------------------------------------------------------------

H. Amendment Regarding the Rule 12g3-2(b) Exemption

    We are adopting, substantially as reproposed, an amendment to 
Exchange Act Rule 12g3-2 \164\ that will apply the exemption under 
Exchange Act Rule 12g3-2(b) immediately to an issuer of equity 
securities upon the effectiveness of its termination of reporting under 
Rule 12h-6.\165\ As a condition to the immediate application of the 
Rule 12g3-2(b) exemption upon its termination of reporting under Rule 
12h-6, an issuer must publish subsequently in English material home 
country documents required under Rule 12g3-2(b)(1)(iii) on its Web site 
or through an electronic information delivery system generally 
available to the public in its primary trading market.\166\
---------------------------------------------------------------------------

    \164\ New Exchange Act Rule 12g3-2(e)(1) (17 CFR 240.12g3-
2(e)(1)).
    \165\ Currently, foreign private issuers that registered a class 
of securities under section 12 must wait at least 18 months 
following their termination of reporting before they would be 
eligible to apply for the Rule 12g3-2(b) exemption. In addition, 
foreign private issuers with an active or suspended reporting 
obligation under section 15(d) have thus far not been eligible to 
claim the Rule 12g3-2(b) exemption. See Rule 12g3-2(d)(1) (17 CFR 
240.12g3-2(d)(1)), which currently excepts from the 18 month 
requirement only issuers that have filed Securities Act registration 
statements using the Multijurisdictional Disclosure Act (MJDS) 
forms.
    \166\ New Exchange Act Rule 12g3-2(e)(2) (17 CFR 240.12g3 -
2(e)(2)).
---------------------------------------------------------------------------

    The purpose of this condition is to provide U.S. investors with 
access to material information about an issuer of equity securities 
following its termination of reporting pursuant to Rule 12h-6.\167\ In 
addition, an issuer

[[Page 16948]]

will be able to maintain a sponsored ADR facility with respect to its 
securities.\168\ This condition also will facilitate resales of that 
issuer's securities to qualified institutional buyers under Rule 
144A.\169\ Moreover, having a foreign private issuer's key home country 
documents posted in English on its web site will assist U.S. investors 
who are interested in trading the issuer's securities in its primary 
securities market.\170\
---------------------------------------------------------------------------

    \167\ Any post-termination trading of a foreign private issuer's 
securities in the United States would have to occur through over-
the-counter markets such as that maintained by the Pink Sheets, LLC 
since, as of April, 1998, the NASD and the Commission have required 
a foreign private issuer to register a class of securities under 
Exchange Act section 12 before its securities could be traded 
through the electronic over-the-counter bulletin board administered 
by Nasdaq. See, for example, NASD Notice to Members (January 1998).
    \168\ In order to establish an ADR facility, an issuer must 
register the ADRs on Form F-6 (17 CFR 239.36) under the Securities 
Act. The eligibility criteria for the use of Form F-6 include the 
requirement that the issuer have a reporting obligation under 
Exchange Act section 13(a) or have established the exemption under 
Rule 12g3-2(b). See General Instruction I.A.3 of Form F-6.
    \169\ See Securities Act Rule 144A(d)(4) (17 CFR 
230.144A(d)(4)).
    \170\ Brokers currently are exempt from complying with certain 
information obligations under Exchange Act Rule 15c2-11 (17 CFR 
240.15c2-11) when a foreign company has established and maintains 
the Rule 12g3-2(b) exemption. See Release No. 34-41110 (February 
25,1999), 64 FR 11124 (March 8, 1999).
---------------------------------------------------------------------------

    The adopted extension of Rule 12g3-2(b) will apply both to a class 
of equity securities formerly registered under section 12(g) and one 
that formerly gave rise to section 15(d) reporting obligations, as 
reproposed. The Rule 12g3-2(b) exemption received under new Rule 12g3-
2(e) will remain in effect for as long as the foreign private issuer 
satisfies the rule's electronic publication conditions or until the 
issuer registers a new class of securities under section 12 or incurs 
section 15(d) reporting obligations by filing a new Securities Act 
registration statement, which has become effective.\171\
---------------------------------------------------------------------------

    \171\ See New Exchange Act Rule 12g3-2(e)(3) (17 CFR 240.12g3-
2(e)(3)).
---------------------------------------------------------------------------

1. Extension of the Rule 12g3-2(b) Exemption Under Rule 12g3-2(e)
    As adopted, because Rule 12g3-2(e) applies to any issuer that has 
terminated its reporting under Rule 12h-6, the rule amendment will 
effectively extend the Rule 12g3-2(b) exemption to:
     a foreign private issuer immediately upon its termination 
of reporting regarding a class of equity securities pursuant to Rule 
12h-6(a);
     a successor issuer immediately upon its termination of 
reporting regarding a class of equity securities pursuant to Rule 12h-
6(d); and
     a prior Form 15 filer immediately upon its termination of 
reporting regarding a class of equity securities pursuant to Rule 12h-
6(i).\172\
---------------------------------------------------------------------------

    \172\ Most parties that commented on reproposed Rule 12g3-2(e) 
favored the extension of the Rule 12g3-2(b) exemption to the above 
categories of issuers. See, for example, the letter from the ABA.
---------------------------------------------------------------------------

    Currently Rule 12g3-2(d)(2) precludes extending the Rule 12g3-2(b) 
exemption to a foreign private issuer, other than a Canadian issuer 
using the MJDS forms, that has issued securities in a merger or other 
similar transaction to acquire a company that has registered a class of 
securities under section 12 or has a reporting obligation under section 
15(d).\173\ As amended, and as reproposed, Rule 12g3-2(d)(2) will 
effectively extend the Rule 12g3-2(b) exemption to a successor issuer 
that has terminated its Exchange Act reporting obligations under Rule 
12h-6(d). Since we are permitting a successor issuer to rely on its 
predecessor's reporting history for the purpose of Rule 12h-6, we 
believe the issuer should also benefit from claiming the Rule 12g3-2(b) 
exemption immediately upon the effectiveness of its Form 15F.
---------------------------------------------------------------------------

    \173\ 17 CFR 240.12g3-2(d)(2).
---------------------------------------------------------------------------

    Also as reproposed, we are extending the Rule 12g3-2(b) amendment 
immediately upon the termination of reporting pursuant to Rule 12h-6(i) 
to a foreign private issuer that, before the effective date of Rule 
12h-6, terminated its registration or suspended its reporting 
obligations regarding a class of equity securities after filing a Form 
15. This is consistent with our expansion of the scope of Rule 12h-6 to 
encompass prior Form 15 filers. Without this change, a prior Form 15 
filer would find itself subject to the 18 month waiting period that 
currently exists under Rule 12g3-2(d), although the issuer qualified 
for termination of reporting under Rule 12h-6(i).
    We further are permitting a foreign private issuer that filed a 
Form 15F solely to terminate its reporting obligations regarding a 
class of debt securities to establish the Rule 12g3-2(b) exemption for 
a class of equity securities upon the effectiveness of its termination 
of reporting regarding the class of debt securities.\174\ Since we are 
abolishing the 18 month ``waiting period'' for equity securities 
issuers that have terminated their Exchange Act reporting obligations 
pursuant to Rule 12h-6, it would serve no useful purpose to impose this 
waiting period on a debt securities issuer that determines that it will 
need the Rule 12g3-2(b) exemption for a class of equity securities 
following its termination of reporting under Rule 12h-6.
---------------------------------------------------------------------------

    \174\ New Exchange Act Rule 12g3-2(e)(4) (17 CFR 240.12g3-
2(e)(4)).
---------------------------------------------------------------------------

    The reproposed version of Rule 12g3-2(e)(4) provided that a debt 
securities issuer could apply for the Rule 12g3-2(b) exemption at any 
time following the effectiveness of its termination of reporting 
regarding the class of debt securities. One commenter pointed out that 
this version, if adopted, would jeopardize the legality of a sponsored 
ADR facility maintained by a registered debt securities issuer 
regarding a class of equity securities.\175\ A foreign private issuer 
that has registered only debt securities under the Securities Act may 
establish an ADR facility for its equity securities by filing and 
having become effective a Form F-6 registration statement because it is 
an Exchange Act reporting company.\176\ Such an issuer would lose the 
legal basis for its ADR facility if, before it could apply for the Rule 
12g3-2(b) exemption, it had to wait until after the completion of the 
90-day waiting period, when the termination of its Exchange Act 
reporting obligations under Rule 12h-6 would become effective.
---------------------------------------------------------------------------

    \175\ See the letter from MTR Corporation.
    \176\ See General Instruction I.A.3 of Form F-6.
---------------------------------------------------------------------------

    As we have previously stated, we value the formation of ADR 
facilities, because they are beneficial to U.S. investors, and we 
encourage foreign issuers to continue to maintain their ADR facilities 
after terminating their Exchange Act reporting obligations. Therefore, 
we are clarifying that, under adopted Rule 12g3-2(e)(4), while a debt 
securities issuer may establish the Rule 12g3-2(b) exemption only upon 
the effectiveness of its termination of reporting regarding its class 
of debt securities under Rule 12h-6, it may apply for the Rule 12g3-
2(b) exemption after it has filed its Form 15F and commenced the 90-day 
waiting period.\177\ The issuer must include in that application the 
date that it filed its Form 15F as well as the address of its Internet 
Web site or that of the electronic information delivery system on which 
it will publish the material home country information required under 
Rule 12g3-2(b).
---------------------------------------------------------------------------

    \177\ Commission staff will work with issuers to coordinate the 
establishment of the Rule 12g3-2(b) exemption on the same day as 
their termination of Exchange Act reporting.
---------------------------------------------------------------------------

2. Electronic Publishing of Home Country Documents
    Currently foreign companies claim the Rule 12g3-2(b) exemption by 
submitting to the Commission on an ongoing basis the material required 
by the rule. This material may only be submitted in paper

[[Page 16949]]

format.\178\ Because paper submissions are more difficult to access, we 
are adopting Rule 12g3-2(e), which relies on electronic access to a 
foreign company's home country securities documents, although not 
through the Commission's electronic database.
---------------------------------------------------------------------------

    \178\ A foreign private issuer that has successfully filed an 
application for the Rule 12g3-2(b) exemption must currently furnish 
its home country documents in paper because the application is 
analogous to one submitted for an exemption under Exchange Act 
section 12(h). See Regulation S-T Rule 101(c)(16)(17 CFR 
232.101(c)(16)). Although the Commission's EDGAR database contains 
an entry signifying the receipt of paper documents, materials 
received in paper are not accessible through the EDGAR system.
---------------------------------------------------------------------------

    As part of the condition requiring an issuer to publish its home 
country documents required under Rule 12g3-2(b)(1)(iii) on its Internet 
Web site or through an electronic information delivery system generally 
available to the public in its primary trading market, Rule 12g3-2(e) 
will require an issuer to publish English translations of the following 
documents:
     its annual report, including or accompanied by annual 
financial statements;
     interim reports that include financial statements;
     press releases; and
     all other communications and documents distributed 
directly to security holders of each class of securities to which the 
exemption relates.\179\
---------------------------------------------------------------------------

    \179\ Note 1 to Rule 12g3-2(e). Rule 12g3-2(b) requires an 
exempt issuer to submit substantially the same categories of home 
country documents as a reporting issuer must furnish to the 
Commission under cover of Form 6-K. Moreover, both Rule 12g3-2(b) 
and Form 6-K state that only material information need be furnished 
under the rule and form. See Rule 12g3-2(b)(3) (17 CFR 240.12g3-
2(b)(3)) and General Instruction B to Form 6-K.
---------------------------------------------------------------------------

    Rule 12g3-2(e) will further require a foreign private issuer of 
equity securities to disclose in the Form 15F the address of its 
Internet Web site or that of the electronic information delivery system 
in its primary trading market on which it will publish the information 
required under Rule 12g3-2(b)(1)(iii).\180\ The purpose of this 
requirement is to alert investors and the Commission regarding where 
investors and others may find the company's home country documents 
should a problem arise concerning the Internet location of those 
documents.
---------------------------------------------------------------------------

    \180\ Note 3 to Rule 12g3-2(e). An issuer will not have to 
update the Form 15F to reflect a change in that address.
---------------------------------------------------------------------------

    Currently non-reporting issuers that seek the Rule 12g3-2(b) 
exemption must submit their letter application for the exemption and 
their home country documents to the Commission in paper. The same 
primary reason for requiring an issuer to publish its home country 
documents electronically after it terminates its reporting obligations 
under Rule 12h-6 applies equally to current Rule 12g3-2(b) exempt 
companies and the non-reporting companies that eventually will apply 
for the exemption. In each case, the electronic posting of an issuer's 
home country documents will increase an investor's ability to access 
those documents.
    Therefore, we are adopting, as proposed, an amendment to Rule 12g3-
2 to permit a foreign private issuer that, upon application to the 
Commission and not after filing Form 15F, has obtained or will obtain 
the Rule 12g3-2(b) exemption to publish its home country documents that 
it is required to furnish on a continuous basis under Rule 12g3-
2(b)(1)(iii) on its Internet Web site or through an electronic 
information delivery system generally available to the public in its 
primary trading market.\181\ As a condition to this electronic posting, 
an issuer that wishes to use this procedure will have to comply with 
the English translation requirements of reproposed Rule 12g3-2(e). It 
also will have to provide the Commission with the address of its 
Internet Web site or that of the electronic information delivery system 
in its primary trading market in its application for the Rule 12g3-2(b) 
exemption or in an amendment to that application.
---------------------------------------------------------------------------

    \181\ New Exchange Act Rule 12g3-2(f) (17 CFR 240.12g3-2(f)). 
Parties that commented on the reproposed extension of Rule 12g3-2(b) 
supported this electronic publishing provision for issuers claiming 
the Rule 12g3-2(b) other than through Rule 12h-6. See, for example, 
the letters from the ABA and Skadden Arps.
---------------------------------------------------------------------------

    Currently the Commission does not have an established means for a 
non-reporting company to submit electronically to the Commission its 
initial documents under Rule 12g3-2(b)(1)(i) and (ii).\182\ Therefore, 
an applicant will have to continue to submit its letter application and 
the home country documents submitted in support of its initial 
application to the Commission in paper.\183\
---------------------------------------------------------------------------

    \182\ 17 CFR 240.12g3-2(b)(1)(i) and (ii).
    \183\ As under current practice, the applicant should send these 
initial materials to the Commission's Office of International 
Corporate Finance in the Division of Corporation Finance.
---------------------------------------------------------------------------

    At both the proposing and reproposing stages, some commenters 
suggested that the Commission impose a specific time limit, for example 
three years, governing how long an issuer must keep its home country 
documents on its Internet Web site.\184\ We decline to adopt a specific 
time limit primarily because different types of home country documents 
may require different periods of electronic posting. While an issuer 
will be required to post electronically a home country document for a 
reasonable period of time, what constitutes a reasonable period will 
depend on the nature and purpose of the home country document. At a 
minimum, we suggest companies provide Web site access to their home 
country reports for at least a 12 month period.
---------------------------------------------------------------------------

    \184\ See Part II.H.2 of the Reproposing Release and, more 
recently, the letter from Sullivan & Cromwell.
---------------------------------------------------------------------------

    We also suggest that, if an issuer publishes its home country 
documents required under Rule 12g3-2(b) on an electronic information 
delivery system or an Internet Web site that is not in English, the 
issuer provide a prominent link on its Internet Web site directing 
investors to those home country documents in English.

I. Concerns Regarding Securities Act Rule 701

    Some commenters asked that we clarify the availability of 
Securities Act Rule 701 \185\ for a foreign private issuer that 
terminates its registration and reporting obligations under Rule 12h-6. 
By its terms, Rule 701 is available to any issuer that is not subject 
to the reporting requirements of Exchange Act section 13 or 15(d). 
Therefore, upon the effectiveness of termination of registration and 
reporting requirements under Rule 12h-6, a foreign private issuer would 
appear to satisfy this condition of Rule 701.
---------------------------------------------------------------------------

    \185\ 17 CFR 230.701. Rule 701 provides a Securities Act 
exemption for the offer and sale of securities to employees and 
others pursuant to certain compensatory benefit plans and contracts 
relating to compensation.
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    As we noted when originally proposing Rule 12h-6, before the filing 
of a Form 15F, a foreign private issuer would have to file a post-
effective amendment to terminate the registration of its remaining 
unsold securities under any of its Securities Act registration 
statements.\186\ This would include a Form S-8 registration statement 
relating to securities issuable under certain compensatory benefit 
plans. After the effectiveness of the Form 15F, a foreign private 
issuer would be able to rely on Rule 701 with respect to unsold 
securities that had previously been covered by the Form S-8 
registration statement.
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    \186\ See the Original Proposing Release at n. 45.
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III. Paperwork Reduction Act Analysis

    The final rule amendments contain ``collection of information'' 
requirements within the meaning of the Paperwork Reduction Act of 1995

[[Page 16950]]

(``PRA'').\187\ The titles of the affected collection of informations 
are Form 20-F (OMB Control No. 3235-0288), Form 40-F (OMB Control No. 
3235-0381), Form 6-K (OMB Control No. 3235-0116), new Form 15F, and 
submissions under Exchange Act Rule 12g3-2 (OMB Control No. 3235-
0119).\188\ An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information such as Form 20-F 
or new Form 15F unless it displays a currently valid OMB control 
number. Compliance with the disclosure requirements of new Form 15F and 
new Rule 12h-6, which will affect the above collections of information, 
is mandatory.
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    \187\ 44 U.S.C. 3501 et seq.
    \188\ A limited number of foreign private issuers file annual 
reports on Form 10-K. In voluntarily electing to file periodic 
reports using domestic issuer forms, these issuers seem to have 
closely aligned themselves with the U.S. market. Accordingly, for 
the purpose of the Paperwork Reduction Act Analysis, these issuers 
do not appear likely to terminate their Exchange Act registration 
under new Rule 12h-6, and we have assumed that none of these 
companies will seek to use Rule 12h-6. Foreign private issuers that 
file periodic reports using domestic issuer forms will be eligible, 
nonetheless, to use Rule 12h-6.
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    Form 20-F sets forth the disclosure requirements for a foreign 
private issuer's annual report and registration statement under the 
Exchange Act as well as many of the disclosure requirements for a 
foreign private issuer's registration statements under the Securities 
Act. We adopted Form 20-F pursuant to the Exchange Act and the 
Securities Act in order to provide investors with information about 
foreign private issuers that have registered securities with the 
Commission.
    Form 40-F sets forth the disclosure requirements regarding the 
annual report and registration statement under the Exchange Act for a 
Canadian issuer that is qualified to use the Multijurisdictional 
Disclosure System (``MJDS''). We adopted Form 40-F pursuant to the 
Exchange Act in order to permit qualified Canadian issuers to prepare 
their Exchange Act annual reports and registration statements based 
primarily in accordance with Canadian requirements.
    Form 6-K is used by a foreign private issuer to report material 
information that it:
     makes or is required to make public under the laws of the 
jurisdiction of its incorporation, domicile or organization (its ``home 
country'');
     files or is required to file with its home country stock 
exchange that is made public by that exchange; or
     distributes or is required to distribute to its security 
holders.
    A foreign private issuer may attach annual reports to security 
holders, statutory reports, press releases and other documents as 
exhibits or attachments to the Form 6-K. We adopted Form 6-K under the 
Exchange Act in order to keep investors informed on an ongoing basis 
about foreign private issuers that have registered securities with the 
Commission.
    New Form 15F is the form that a foreign private issuer must file 
when terminating its Exchange Act reporting obligations under new 
Exchange Act Rule 12h-6. Form 15F requires a filer to disclose 
information that will help investors understand the foreign private 
issuer's decision to terminate its Exchange Act reporting obligations 
and assist Commission staff in assessing whether the Form 15F filer is 
eligible to terminate its Exchange Act reporting obligations pursuant 
to Rule 12h-6.
    Exchange Act Rule 12g3-2 is an exemptive rule that, under paragraph 
(b) of that rule, provides an exemption from Exchange Act section 12(g) 
registration for a foreign private issuer that, in addition to 
satisfying other requirements, submits copies of its material home 
country documents to the Commission on an ongoing basis. We adopted 
paragraph (b) of Rule 12g3-2 in order to provide information for U.S. 
investors concerning foreign private issuers with limited securities 
trading in U.S. capital markets.
    The hours and costs associated with preparing, filing and sending 
Forms 20-F, 40-F, 6-K and 15F, and making submissions under Exchange 
Act Rule 12g3-2(b) constitute reporting and cost burdens imposed by 
those collections of information. We based our estimates of the effects 
that the final rule amendments will have on those collections of 
information primarily on our review of the most recently completed PRA 
submissions for Forms 20-F, 40-F, and 6-K, and for submissions under 
Rule 12g3-2(b), on the particular requirements for those forms and 
submissions, and on relevant information, for example, concerning 
comparative trading volume for numerous filers of those forms.
    Final Rule 12h-6 will permit a foreign private issuer to terminate 
permanently its Exchange Act reporting obligations, including the 
obligation to file an annual report on Form 20-F or 40-F and the 
obligation to submit Form 6-K reports, after filing a Form 15F. Final 
Rule 12h-6 and the accompanying rule amendments will also enable a 
foreign private issuer to claim the Rule 12g3-2(b) exemption 
immediately upon the effectiveness of its termination of reporting 
pursuant to the new exit rule, and to publish copies of its home 
country documents required by Rule 12g3-2(b) on its Internet Web site 
instead of submitting them in paper to the Commission. We have based 
the annual burden and cost estimates of the adopted rule amendments on 
Forms 20-F, 40-F, 6-K and 15F, and on the home country submissions 
required under Rule 12g3-2(b), on the following estimates and 
assumptions:
     a foreign private issuer incurs or will incur 25% of the 
annual burden required to produce each Form 20-F or 40-F report or Form 
15F;
     outside firms, including legal counsel, accountants and 
other advisors, incur or will incur 75% of the burden required to 
produce each Form 20-F or 40-F report or Form 15F at an average cost of 
$400 per hour;
     a foreign private issuer incurs or will incur 75% of the 
annual burden required to produce each Form 6-K report and Rule 12g3-
2(b) submission, not including English translation work, and 25% of the 
annual burden required to perform the English translation work for Form 
6-K reports and Rule 12g3-2(b) submissions; and
     outside firms, including legal counsel, accountants and 
other advisors, incur or will incur 25% of the burden required to 
produce each Form 6-K report and Rule 12g3-2(b) submission, not 
including English translation work, at an average cost of $400 per 
hour, and 75% of the annual burden resulting from the English 
translation work for Form 6-K reports and Rule 12g3-2(b) submissions, 
at an average cost of $125 per hour.
    As was the case with the originally proposed and reproposed rule 
amendments, the estimated effects of the adopted rule amendments 
reflect the initial phase-in period of the Exchange Act termination 
process under new Rule 12h-6 and Form 15F during the first year of 
availability. We expect that most of these estimated effects will occur 
on a one-time, rather than a recurring, basis. While we expect that 
some issuers will terminate their Exchange Act reporting under Rule 
12h-6 and file Form 15F in subsequent years, we do not expect the 
resulting burdens and costs to be of the same magnitude as the burdens 
and costs currently expected during the first year. Moreover, we expect 
that over time, the number of foreign private issuers that are 
encouraged to enter the Exchange Act reporting system as a result of 
the rule amendments will increase so that, on an annual basis, the 
number of foreign companies entering the Exchange Act reporting regime 
will exceed the number exiting that regime.

[[Page 16951]]

    We published a notice requesting comment on the collection of 
information requirements in the Original Proposing Release and 
submitted these requirements to the Office of Management and Budget 
(``OMB'') for review in accordance with the PRA.\189\ OMB subsequently 
approved the proposed requirements without change. We received several 
comment letters regarding the proposed rule amendments, although none 
addressed their estimated effects on the collection of information 
requirements. We revised and reproposed Rule 12h-6 and the accompanying 
rule amendments in response to these comments. We also revised the 
estimated reporting and cost burdens for the reproposed rules.\190\ 
Because we are adopting Rule 12h-6 and the accompanying rule amendments 
substantially as reproposed, the estimated reporting and cost burdens 
for the adopted rules remain the same as the estimated reporting and 
cost burdens for the reproposed rules, as discussed below.
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    \189\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
    \190\ See Part III of the Reproposing Release.
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A. Form 20-F

    During the first year of effectiveness of reproposed Rule 12h-6, we 
estimate that as many as 25% of Form 20-F filers could terminate their 
Exchange Act reporting obligations under the new rule.\191\ However, we 
continue to believe that Rule 12h-6 will encourage some foreign 
companies to enter the Exchange Act registration and reporting regime 
for the first time. Consequently, during the first effective year of 
Rule 12h-6, the number of Form 20-F annual reports filed could increase 
by 5%, leading to a net decrease of 20% for Form 20-Fs filed over this 
same period. This net decrease would cause:
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    \191\ 191 As noted at the reproposing stage, a review by the 
Commission's Office of Economic Analysis of trading volume data on a 
sample of foreign Exchange Act reporting companies that filed Form 
20-F during 2004 suggested that approximately 30% of filers would 
meet the U.S. trading volume threshold of the reproposed rule. See 
Part III, n. 137 of the Reproposing Release. A more recent review of 
the Office of Economic Analysis of trading volume data on foreign 
Exchange Act reporting companies with common equity trading during 
2005 indicates that an estimated 29% of filers would meet the U.S. 
trading volume threshold of the adopted rule. That percentage may 
vary by region.
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     the number of Form 20-Fs filed to decrease to 880; \192\
---------------------------------------------------------------------------

    \192\ 1,100 Form 20-Fs filed annually (prior to this rulemaking) 
x .20 = 220; 1,100--220 = 880 Form 20-Fs filed annually.
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     the total number of burden hours required to produce Form 
20-F \193\ to decrease to 2,314,400 total hours; \194\
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    \193\ As in the Reproposing Release, we estimate that a foreign 
private issuer requires on average 2,630 hours to produce each Form 
20-F.
    \194\ 880 Form 20-Fs filed annually x 2,630 hours per Form 20-F 
= 2,314,400 hours.
---------------------------------------------------------------------------

     the total number of burden hours required by foreign 
private issuers to produce Form 20-F to decrease to 578,600 total 
hours; \195\ and
---------------------------------------------------------------------------

    \195\ 880 Form 20-Fs x 2,630 hours per Form 20-F x .25 = 578,600 
hours. Thus, we estimate that, during the first year of 
effectiveness of Rule 12h-6, foreign private issuers could incur a 
reduction of 144,650 hours in the number of burden hours required to 
produce Form 20-F. 220 Form 20-Fs x 2,630 hrs. x .25 = 144,650 
hours. Using an estimated hourly rate of $175 for in-house work, 
foreign private issuers could incur Form 20-F cost savings of 
$25,313,750 during Rule 12h-6's first year of effectiveness. 144,650 
hrs. x $175/hr. = $25,313,750.
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     the cost incurred by outside firms \196\ to produce Form 
20-F to total $694,320,000.\197\
---------------------------------------------------------------------------

    \196\ We estimate cost savings of $173,580,000 regarding outside 
firms' production of Form 20-Fs during Rule 12h-6's first year of 
effectiveness. 220 Form 20-Fs x 2,630 hrs. x .75 x $400/hr. = 
$173,580,000. Thus, during the first year of its effectiveness, Rule 
12h-6 could result in total estimated Form 20-F cost savings of 
$198,893,750. $25,313,750 + $173,580,000 = $198,893,750.
    \197\ 880 Form 20-Fs x 2,630 hours x .75 x $400/hour = 
$694,320,000. The $108,487,500 increase reflects the increase in the 
estimated outside firm hourly rate from $300 to $400.
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B. Form 40-F

    During the first year of effectiveness of Rule 12h-6, we estimate 
that as many as 10% of Form 40-F filers could terminate their Exchange 
Act reporting obligations under the new rule.\198\ However, the 
reproposed rule could encourage some foreign companies to enter the 
Exchange Act registration and reporting regime for the first time, 
including some that would be eligible to use the MJDS forms, including 
the Form 40-F annual report. Consequently, over this same period, the 
number of Form 40-F annual reports filed could increase by 
approximately 3%, resulting in a net decrease of 7% for Form 40-Fs 
filed over this same period.\199\ This net decrease would cause:
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    \198\ We do not expect the expanded scope of reproposed Rule 
12h-6 to have as great an effect on MJDS filers as other foreign 
reporting companies since, typically, the U.S. trading volume 
relating to those shares is significant. Moreover, because of their 
close proximity to U.S. capital markets, we believe MJDS filers are 
less likely to seek to terminate their Exchange Act reporting 
obligations than other foreign private issuers. Accordingly, based 
on current experience, we expect no more than 10% of Form 40-F 
filers will terminate their Exchange Act reporting obligations under 
Rule 12h-6.
    \199\ This is the same percentage previously estimated under the 
originally proposed rule amendments.
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     the number of Form 40-Fs filed to total 125; \200\
---------------------------------------------------------------------------

    \200\ 134 Form 40-Fs filed annually (prior to this rulemaking) x 
.07 = 9; 134-9 = 125 Form 40-Fs filed annually.
---------------------------------------------------------------------------

     the number of burden hours required to produce Form 40-F 
\201\ to total 53,375 total hours; \202\
---------------------------------------------------------------------------

    \201\ As in the Reproposing Release, we estimate that it takes 
427 hours on average to produce a Form 40-F report.
    \202\ 125 Form 40-Fs filed annually x 427 hours per Form 40-F = 
53,375 hours.
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     the number of burden hours required by foreign private 
issuers to produce Form 40-F to total 13,344 hours; \203\ and
---------------------------------------------------------------------------

    \203\ 125 Form 40-Fs filed annually x 427 hours per Form 40-F x 
.25 = 13,344 hours. Thus, we estimate that, during the first year of 
effectiveness of Rule 12h-6, foreign private issuers could incur a 
reduction of 961 hours in the number of burden hours required to 
produce Form 40-F. 9 Form 40-Fs x 427 hrs. x .25 = 961 hrs. This 
could result in estimated Form 40-F cost savings for foreign private 
issuers of $168,175. 961 hrs. x $175/hr. = $168,175.
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     the cost incurred by outside firms to produce Form 40-F to 
total $16,012,500.\204\
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    \204\ 125 Form 40-Fs filed annually x 427 hours per Form 40-F x 
.75 x $400/hour = $16,012,500. This estimate corresponds to 
estimated cost savings of $1,152,900 in connection with outside 
firms' production of Form 40-F during reproposed Rule 12h-6's first 
year of effectiveness. 9 x 427 hrs. x .75 x $400/hr. = $1,152,900. 
Thus, during the first year of its effectiveness, Rule 12h-6 could 
result in estimated total Form 40-F cost savings of $168,175 + 
$1,152,900 = $1,321,075.
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C. Form 6-K

    During the first year of effectiveness of Rule 12h-6, we estimate 
that as many as 23% of foreign private issuers that furnish Form 6-K 
reports could terminate their Exchange Act reporting obligations under 
the new rule.\205\ However, the adopted rule could encourage some 
foreign companies to enter the Exchange Act registration and reporting 
regime for the first time, including those that will furnish Form 6-K 
reports. Consequently, over this same period, the number of Form 6-K 
reports furnished could increase by as much as 5%,\206\ resulting in a 
net decrease of 18% for Form 6-Ks furnished over this same period. This 
net decrease would cause:
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    \205\ This estimate is based on the estimated number of Form 20-
F and Form 40-F filers that are expected to terminate their Exchange 
Act reporting obligations under 2h-6. 1,100 Form 20-Fs x .25 = 275; 
134 Form 40-Fs x .10 = 13; 288 = .23 x 1,234.
    \206\ This estimate is based on the estimated number of foreign 
private issuers that are expected to enter the Exchange Act 
reporting regime and file Form 20-Fs or Form 40-Fs as a result of 
this rulemaking during the first year of effectiveness. 1,100 Form 
20-Fs x .05 = 55; 134 Form 40-Fs x .03 = 4; 59 = .05 x 1,234.

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[[Page 16952]]

     the number of Form 6-K reports furnished to decrease to 
12,022; \207\
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    \207\ 14,661 Form 6-K reports x .18 = 2,639; 14,661 - 2,639 = 
12,022 Form 6-K reports.
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     the total number of burden hours required to produce the 
Form 6-Ks \208\ to decrease to 104,591 total hours; \209\
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    \208\ In the Original and Reproposing Releases, we estimated 
that, prior to this rulemaking, it took a total of 127,197 annual 
burden hours to produce the 14,661 Form 6-Ks, or approximately 8.7 
hours per Form 6-K (for work performed by foreign private issuers 
and outside firms). We continue to use this 8.7 hour estimate for 
the final rule amendments.
    \209\ 12,022 Form 6-K reports x 8.7 hours = 104,591 hours.
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     the total number of burden hours required by foreign 
private issuers \210\ to produce Form 6-K to decrease to 65,369 hours; 
\211\ and
---------------------------------------------------------------------------

    \210\ We estimate that, during the first year of effectiveness 
of Rule 12h-6, foreign private issuers could incur a reduction of 
14,349 hours in the number of burden hours required to produce Form 
6-K. 2,639 Form 6-Ks x 8.7 hours = 22,959 hours; 22,959 hours x .25 
= 5,740 hours of English translation work; 5,740 hours x .25 = 1,435 
hours of English translation work for foreign private issuers; 
22,959 x .75 = 17,219 hours of non-English translation work; 17,219 
x .75 = 12,914 hours of non-English translation work for foreign 
private issuers; 1,435 + 12,914 = 14,349 hours. This could result in 
estimated Form 6-K cost savings of $2,511,075 for foreign private 
issuers during the first year of Rule 12h-6's effectiveness. 14,349 
hrs. x $175/hr. = $2,511,075.
    \211\ 104,591 hours x .25 = 26,148 hours for English translation 
work; 104,591 hours--26,148 hours = 78,443 hours for non-English 
translation work; 78,443 hours x .75 = 58,832 hours for non-English 
translation work performed by foreign private issuers; 26,148 hours 
x .25 = 6,537 hours of English translation work performed by foreign 
private issuers; 58,832 hours + 6,537 hours = 65,369 total hours for 
Form 6-K work performed by foreign private issuers, or 5.4 hours for 
foreign private issuer work per Form 6-K.
---------------------------------------------------------------------------

     the cost incurred by outside firms \212\ to produce Form 
6-K to total $10,295,775.\213\
---------------------------------------------------------------------------

    \212\ We estimate cost savings of $2,260,025 in connection with 
outside firms' production of Form 6-K during Rule 12h-6's first year 
of effectiveness. 5,740 hrs. x .75 x $125/hour = $538,125 for 
English translation work; 17,219 x .25 x $400/hour = $1,721,900 for 
non-English translation work. $538,125 + $1,721,900 = $2,260,025 in 
Form 6-K cost savings for outside firms. Thus, Rule 12h-6 could 
result in total estimated Form 6-K cost savings of $4,771,100. 
$2,511,075 + $2,260,025 = $4,771,100.
    \213\ 78,443 hours x .25 = 19,611 hours x $400/hour = $7,844,400 
for non-translation work; 26,148 hours x .75 = 19,611 hours x $125/
hour = $2,451,375 for English translation work; $7,844,400 + 
$2,451,375 = $10,295,775 for total work performed by outside firms. 
The $2,078,475 increase reflects the increase in the estimated 
outside firm hourly rate from $300 to $400 and the increase in the 
estimated outside firm rate for English translation work from $75 to 
$125/hour based on current information provided by financial printer 
representatives.
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D. Form 15F

    During the first year of effectiveness of Rule 12h-6, we estimate 
that as many as 351 foreign private issuers \214\ could file a Form 15F 
to terminate their Exchange Act reporting obligations, which would 
cause:
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    \214\ We derived this estimate from the number of Form 20-F 
filers (275) and Form 40-F filers (13) estimated to elect to 
terminate their Exchange Act reporting obligations under Rule 12h-6 
during the first year of the rule's effectiveness. We then added to 
this sum (288) the number of prior Form 15 filers (63) estimated to 
file a Form 15F during the first year of Rule 12h-6's effectiveness 
in order to make their Form 15 termination or suspension of 
reporting obligations permanent. The latter number is based on the 
approximate number of foreign private issuers that filed a Form 15 
from 2003 through the present.
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     the number of burden hours required to produce Form 15F 
\215\ to total 10,530 hours; \216\
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    \215\ In the Original and Reproposing Releases, we estimated 
that the production of each Form 15F would require 30 hours. We 
continue to use this estimate for the final rule amendments.
    \216\ 351 Form 15Fs x 30 = 10,530 hours.
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     foreign private issuers to incur a total of 2,633 hours to 
produce Form 15F; \217\ and
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    \217\ 10,530 hours x .25 = 2,633 hours. This could result in 
estimated Form 15F costs for foreign private issuers of $460,775 
during Rule 12h-6's first year of effectiveness. 2,633 hrs. x $175 = 
$460,775.
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     outside firms to incur a total cost of $3,159,200 \218\ to 
produce Form 15F.\219\
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    \218\ 10,530 hours x .75 = 7,898 hours; 7,898 hours x $400/hour 
= $3,159,200. The $3,159,200 increase reflects the increase in the 
number of estimated Form 15F filers and the increase in the 
estimated outside firm hourly rate from $300 to $400.
    \219\ Thus, Rule 12h-6 could result in total estimated Form 15F 
costs of $3,619,975 during its first year of effectiveness. $460,775 
+ $3,159,200 = $3,619,975.
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E. Rule 12g3-2(b) Submissions

    We estimate that 685 foreign private issuers currently have 
obtained the Rule 12g3-2(b) exemption.\220\ In addition, we estimate 
that each Rule 12g3-2(b) exempt issuer currently makes 12 Rule 12g3-
2(b) submissions per year for a total of 8,220 Rule 12g3-2(b) 
submissions. We further estimate that it takes a total of 32,880 annual 
burden hours, or 4 annual burden hours per submission (for work 
performed by foreign private issuers and outside firms), to produce the 
8,220 Rule 12g3-2(b) submissions.\221\
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    \220\ This estimate is based on Commission staff's most recent 
annual review of the number of current Rule 12g3-2(b) exempt 
companies, which will be available soon on our Internet Web site at 
http://www.sec.gov/divisions/corpfin.shtml.
    \221\ These estimates are the same as the estimates presented in 
the Reproposing Release. As we stated in that release, the estimates 
represent an adjustment of 31,080 hours from the 1,800 total hours 
previously reported for Rule 12g3-2(b) submissions. They reflect a 
re-evaluation of the number of foreign private issuers that 
currently claim the Rule 12g3-2(b) exemption, the number of Rule 
12g3-2(b) submissions made by them, and the number of burden hours 
required for their production, in addition to assessing the effects 
on Rule 12g3-2(b) submissions expected to result from adoption of 
the final rule amendments. We believe these estimates more 
accurately reflect the current burden hours required for the 
collections of information submitted under Rule 12g3-2(b).
---------------------------------------------------------------------------

    During the first year of effectiveness of reproposed Rule 12h-6, we 
estimate that as many as 351 foreign private issuers could claim the 
Rule 12g3-2(b) exemption immediately upon the effectiveness of their 
termination of reporting under new Rule 12h-6.\222\ This increase in 
the number of Rule 12g3-2(b) exempt issuers would cause:
---------------------------------------------------------------------------

    \222\ This amount includes the estimated 288 Form 20-F and 40-F 
filers expected to terminate their Exchange Act reporting 
obligations under Rule 12h-6 as well as the estimated 63 prior Form 
15 filers expected to file a Form 15F to make their prior 
termination or suspension of reporting under Rule 12h-6.
---------------------------------------------------------------------------

     the number of issuers claiming the Rule 12g3-2(b) 
exemption to total 1,036;
     the number of Rule 12g3-2(b) submissions made annually to 
total 12,432;
     the number of annual burden hours required to produce 
these Rule 12g3-2(b) submissions to total 49,728 hours;
     foreign private issuers to incur a total of 31,080 annual 
burden hours to produce these Rule 12g3-2(b) submissions, or 2.5 annual 
burden hours per submission; \223\ and
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    \223\ Because the home country document submission requirement 
under Rule 12g3-2(b) is similar to the home country document 
submission requirement under Form 6-K, we have used the same 
assumptions regarding the English and non-English translation work 
required under Rule 12g3-2(b) that we adopted for Form 6-K 
submissions. Accordingly: 49,728 hours x .25 = 12,432 total annual 
burden hours for English translation work; 49,728-12,432 = 37,296 
total annual burden hours required for non-English translation work; 
37,296 hours x .75 = 27,972 total annual burden hours incurred by 
foreign private issuers for non-English translation work; 12,432 
hours x .25 = 3,108 total annual hours incurred by foreign private 
issuers for English translation work; 27,972 + 3,108 = 31,080 total 
annual burden hours incurred by foreign private issuers for Rule 
12g3-2(b) submissions, or 2.5 annual burden hours per submission. Of 
the 31,080 hours, 10,530 hours would result from adoption of the new 
rules and 20,550 hours represents an adjustment from the previous 
PRA estimates for Rule 12g3-2 submissions.
---------------------------------------------------------------------------

     outside firms to incur a total cost of $4,909,275 \224\ to 
produce the Rule 12g3-2(b) submissions.\225\
---------------------------------------------------------------------------

    \224\ 49,728 hours x .25 = 12,432 hours for English translation 
work; 12,432 hours x .75 = 9,324 hours; 9,324 hours x $125 = 
$1,165,500 for English translation work; 49,728 hours-12,432 hours = 
37,296 hours for non-English translation work; 37,296 hours x .25 = 
9,324 hours; 9,324 hours x $400 = $3,729,600 for non-English 
translation work; $1,165,500 + $3,729,600 = $4,895,100 for total 
work performed by outside firms. Of that total amount, $1,658,475 
would result from adoption of the new rules and $3,236,625 
constitutes an adjustment from the previous PRA estimates for Rule 
12g3-2 submissions.
    \225\ We further estimate that new Rule 12h-6 and the 
accompanying rule amendments could result in total estimated Rule 
12g3-2(b) costs of $3,501,225 during the first year of their 
effectiveness. 351 issuers x 12 submissions/issuer x 2.5 hrs./
submission = 10,530 hours; 10,530 hours x $175/hr. = $1,842,750 in 
Rule 12g3-2(b) submission costs for foreign private issuers. For 
outside firm costs: 351 issuers x 12 submissions/issuer x 4 hrs./
submission = 16,848 hours; 16,848 x .25 = 4,212 hours of English 
translation work; 4,212 x .75 x $125 = $394,875 of English 
translation costs for outside firms. 16,848 hours x .75 = 12,636 
hours of non-English translation work; 12,636 x .25 x $400 = 
$1,263,600 of non-English translation costs for outside firms. 
$394,875 + $1,263,600 = $1,658,475 in total Rule 12g3-2(b) 
submission costs for outside firms. $1,842,750 + $1,658,475 = 
$3,501,225 in total estimated Rule 12g3-2(b) costs.

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[[Page 16953]]

IV. Cost-Benefit Analysis

A. Expected Benefits

    New Exchange Act Rule 12h-6 and the accompanying rule amendments 
will benefit U.S. investors to the extent that they remove a possible 
disincentive for foreign companies that are not currently Exchange Act 
reporting companies to register their equity and debt securities with 
the Commission. In response to foreign companies' concerns about 
Exchange Act reporting and other obligations, these rules will expand 
the criteria by which a foreign company may terminate those 
obligations. In so doing, the adopted rule amendments should over time 
remove an impediment to foreign company access and participation in 
U.S. public capital markets while still providing U.S. investors with 
the protections afforded by our Exchange Act reporting regime.
    The adopted rule amendments should remove a disincentive for 
foreign firms to enter our Exchange Act reporting regime by lowering 
the cost of exiting from that regime. Investors are expected to benefit 
from the amendments by being able to purchase shares in foreign firms 
that have been registered with the Commission and that, therefore, 
provide a high level of investor protection. In addition, U.S. 
investors may incur lower transaction costs when trading a foreign 
company's shares on a U.S. exchange relative to a foreign exchange.
    To remove a disincentive for foreign companies to enter U.S. public 
capital markets, the adopted rule amendments will benefit U.S. 
investors by enabling a foreign Exchange Act reporting company to lower 
its costs of compliance in connection with Exchange Act deregistration. 
This reduction in the cost of compliance will directly benefit both 
foreign companies and their investors, including those resident in the 
United States.
    The final rule amendments will result in foreign private issuers 
incurring lower costs of Exchange Act compliance in four possible ways. 
First, rather than require a foreign private issuer to determine the 
number of its U.S.holders, as is the case under the current exit rules, 
new Rule 12h-6 will enable a foreign private issuer to rely solely on 
trading volume data regarding its securities in the United States and 
on a worldwide basis when determining whether it may terminate its 
Exchange Act reporting obligations. Because trading volume data is more 
easily obtainable than information regarding its U.S. shareholders, the 
new rule should lower the costs of Exchange Act termination for foreign 
private issuers.
    Second, new Rule 12h-6 will allow a foreign firm to terminate its 
Exchange Act reporting obligations regarding a class of equity 
securities and immediately obtain the Rule 12g3-2(b) exemption. 
Accordingly, such a terminating foreign private issuer would be able to 
avoid the costs associated with continued annual verification that its 
number of holders of record remains below 300.
    Third, new Rule 12h-6 will permit an issuer to rely on the 
assistance of an independent information services provider when 
determining whether it falls below the 300-holder standard. The option 
to hire an independent information services provider may be a more 
efficient and cost-effective mechanism to make that determination. 
Moreover, a foreign company may save costs when assessing its 
eligibility to terminate its registration and reporting under the 300-
holder provision of Rule 12h-6, since the rule will limit the number of 
jurisdictions in which a foreign private issuer must search for the 
amount of securities represented by accounts of customers resident in 
the United States held by brokers, dealers, banks and other nominees. 
The current rules require a foreign private issuer to conduct a 
worldwide search for such U.S. customer accounts.
    Fourth, once having terminated its reporting obligations under new 
Rule 12h-6, a foreign company will no longer be required to incur costs 
associated with producing an Exchange Act annual report or interim Form 
6-K reports.\226\ Based on estimates and assumptions used for the 
purpose of the Paperwork Reduction Act, these estimated cost savings 
could total approximately $200,000,000 for the first year of Rule 12h-
6's effectiveness.\227\
---------------------------------------------------------------------------

    \226\ We recognize that, as a result of terminating their 
Exchange Act reporting obligations under Rule 12h-6, foreign firms 
may accrue other cost savings that are not specifically quantified 
in this section. One such example is an investment in an internal 
control system in order to comply with the Sarbanes-Oxley Act.
    \227\ As discussed in Part III of this release, for the first 
year of Rule 12h-6's effectiveness, estimated cost savings in 
connection with Forms 20-F, 40-F and 6-K could amount to, 
respectively, $198,893,750, $1,321,075, and $4,771,100, for a total 
of $204,985,925. These cost savings could be less to the extent that 
more foreign private issuers register with the Commission over time 
as a result of the adoption of Rule 12h-6.
---------------------------------------------------------------------------

B. Expected Costs

    Investors could incur costs from the adopted rule amendments to the 
extent that currently registered foreign companies respond to the rule 
changes by terminating their Exchange Act registration and reporting 
obligations with respect to their equity and debt securities. If 
Exchange Act disclosure requirements provide more information or 
protection to U.S. or other investors than is provided in an issuer's 
primary trading market, then all investors, both U.S. and foreign, may 
suffer the costs of losing that information and protection upon 
Exchange Act termination.\228\ If this is the case, the announcement 
that a foreign firm is terminating its Exchange Act reporting may 
result in a loss of share value and the incurrence by investors of 
higher costs from trading in the firm's equity and debt securities.
---------------------------------------------------------------------------

    \228\ Conversely, in countries that have similar regulatory 
regimes and levels of investor protection, the impact of U.S. 
deregistration may be mitigated.
---------------------------------------------------------------------------

    There are costs associated with the filing of new Form 15F, which 
is a requirement for a foreign private issuer that terminates its 
Exchange Act registration and reporting under Rule 12h-6.\229\ A 
foreign private issuer will also incur costs in connection with having 
to post on its Internet Web site in English its material home country 
documents required to maintain the Rule 12g3-2(b) exemption that it 
will have received upon the effectiveness of its termination of 
reporting under new Rule 12h-6.\230\
---------------------------------------------------------------------------

    \229\ As discussed in Part III of this release, based on 
estimates and assumptions adopted for the purpose of the Paperwork 
Reduction Act, these costs could total $3,619,975 during the first 
year of the new form's use.
    \230\ As discussed in Part III of this release, based on 
estimates and assumptions adopted for the Paperwork Reduction Act, 
these resulting Rule 12g3-2(b) costs could amount to $3,501,225.
---------------------------------------------------------------------------

    We expect that new Rule 12h-6 will enable some foreign registrants 
to avoid other recent U.S. regulation, such as the Sarbanes-Oxley Act. 
Investors will lose the benefits afforded by the Sarbanes-Oxley Act to 
the extent a current foreign registrant is not fully subject to that 
Act.
    Some U.S. investors might seek to trade in the equity securities of 
a foreign company following its termination of Exchange Act reporting 
under Rule 12h-6. U.S. investors seeking to trade the former reporting 
company's securities in the U.S. may be forced to trade in over-the-
counter markets such as the one administered by Pink Sheets, LLC, which 
could result in higher transaction costs than if the foreign company 
had continued to have a class of securities registered with the 
Commission.

[[Page 16954]]

    U.S. investors seeking to trade the former reporting company's 
securities in its primary trading market also could incur additional 
costs. For example, U.S. investors who held the securities in the form 
of ADRs could incur costs associated with the depositary's conversion 
of the ADRs into ordinary shares.\231\ Moreover, some U.S. investors 
could incur costs associated with finding and contracting with a new 
broker-dealer who is able to trade in the foreign reporting company's 
primary trading market. U.S. investors may face additional costs due to 
the cost of currency conversion and higher transaction costs trading 
the securities in a foreign market.
---------------------------------------------------------------------------

    \231\ A foreign company may terminate its ADR facility whether 
or not it is an Exchange Act registrant, and adopted Rule 12h-6 does 
not require the termination of ADR facilities. In fact, by granting 
foreign private issuers the Rule 12g3-2(b) exemption immediately 
upon their termination of reporting with regard to a class of equity 
securities, Rule 12h-6 will enable foreign private issuers to retain 
their ADR facilities as unlisted facilities following their 
termination of reporting under Rule 12h-6. As adopted, Rule 12h-6 
will require an issuer that has terminated a sponsored ADR facility 
to wait a year before it may file a Form 15F in reliance on the 
trading volume provision of Rule 12h-6 if, on the date of 
termination, the issuer does not meet the trading volume benchmark.
---------------------------------------------------------------------------

    Some investors who wish to make investment decisions regarding 
former Exchange Act reporting foreign companies also may incur costs to 
the extent that the information provided by such companies pursuant to 
any home country regulations is different from that which currently is 
required under the Exchange Act. Such investors could incur costs 
associated with hiring an attorney or investment adviser, to the extent 
that they have not already done so, to explain the material 
differences, if any, between a foreign company's home country reporting 
requirements, as reflected in its home country annual report posted on 
its Internet Web site, and Exchange Act reporting requirements.

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

    When adopting rules under the Exchange Act, Section 23(a)(2) of the 
Exchange Act \232\ requires us to consider the impact that any new rule 
will have on competition. Section 23(a)(2) also prohibits us from 
adopting any rule that will impose a burden on competition not 
necessary or appropriate in furtherance of the purposes of the Exchange 
Act. Furthermore, when engaging in rulemaking that requires us to 
consider or determine whether an action is necessary or appropriate in 
the public interest, Section 3(f) of the Exchange Act \233\ requires 
the Commission to consider whether the action will promote efficiency, 
competition and capital formation.
---------------------------------------------------------------------------

    \232\ 15 U.S.C. 78w(a)(2).
    \233\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    In the Reproposing Release, we considered reproposed Rule 12h-6 and 
the accompanying reproposed rule amendments in light of the standards 
set forth in the above statutory sections. We solicited comment on 
whether, if adopted, reproposed Rule 12h-6 and the other reproposed 
rule amendments would result in any anti-competitive effects or promote 
efficiency, competition and capital formation. We further encouraged 
commenters to provide empirical data or other facts to support their 
views on any anti-competitive effects or any burdens on efficiency, 
competition or capital formation that might result from adoption of 
reproposed Rule 12h-6 and the other reproposed rule amendments.
    We did not receive any comments or any empirical data in this 
regard concerning reproposed Rule 12h-6 and the accompanying rule 
amendments. Accordingly, since the adopted rules are substantially 
similar to the reproposed rules, we continue to believe the new rules 
will provide a foreign reporting company with a more efficient option 
of exiting the Exchange Act reporting system when U.S. investor 
interest has become relatively scarce. In so doing, new Rule 12h-6 and 
the other rule amendments should encourage foreign private issuers to 
register their equity and debt securities with the Commission by 
reassuring foreign private issuers that, should interest in the U.S. 
market for their securities decline sufficiently, they may exit the 
Exchange Act reporting system with little difficulty.
    By providing increased flexibility for foreign private issuers 
regarding our Exchange Act reporting system, the adopted rules should 
encourage foreign companies to participate in U.S. capital markets as 
Exchange Act reporting companies to the benefit of investors. In so 
doing, the adopted rules should foster increased competition between 
domestic and foreign firms for investors in U.S. capital markets.
    Moreover, by requiring a foreign private issuer that has terminated 
its Exchange Act reporting under Rule 12h-6 to publish its home country 
documents required under Exchange Act Rule 12g3-2(b) in English on its 
Internet Web site or through an electronic information delivery system 
that is generally available to the public in its primary trading 
market, the adopted rules will help ensure that U.S. investors continue 
to have ready access to material information in English about the 
foreign private issuer.\234\ Thus, new Rule 12h-6 and the accompanying 
rule amendments should foster increased efficiency in the trading of 
the issuer's securities for U.S. investors following the issuer's 
termination of Exchange Act reporting.
---------------------------------------------------------------------------

    \234\ Similarly, by expanding the scope of the originally 
proposed Rule 12h-6 to permit prior Form 15 filers to terminate 
their Exchange Act reporting obligations under the new exit rule and 
claim the Rule 12g3-2(b) exemption immediately upon such 
termination, the adopted rules will help promote the availability of 
material home country information in English about those issuers for 
U.S. investors.
---------------------------------------------------------------------------

VI. Regulatory Flexibility Act Certification

    Under Section 605(b) of the Regulatory Flexibility Act,\235\ we 
certified that, when adopted, reproposed Rule 12h-6 and the 
accompanying reproposed rule amendments would not have a significant 
economic impact on a substantial number of small entities. We included 
this certification in Part VI of the Reproposing Release. While we 
encouraged written comments regarding this certification, no commenters 
responded to this request.
---------------------------------------------------------------------------

    \235\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

VII. Statutory Basis and Text of Rule Amendments

    We are adopting the amendments to Rule 30-1 of Part 200, Rule 101 
of Regulation S-T, and Exchange Act Rules 12g3-2, 12g-4 and 12h-3, new 
Exchange Act Rule 12h-6 and new Exchange Act Form 15F under the 
authority in sections 6, 7, 10 and 19 of the Securities Act \236\ and 
sections 3(b), 12, 13, 23 and 36 of the Exchange Act.\237\
---------------------------------------------------------------------------

    \236\ 15 U.S.C. 77f, 77g, 77j, and 77s.
    \237\ 15 U.S.C. 78c, 78l, 78m, 78w, and 78mm.
---------------------------------------------------------------------------

List of Subjects

17 CFR Part 200

    Administrative practice and procedure, Authority delegations 
(Government agencies).

17 CFR Parts 232, 240 and 249

    Reporting and recordkeeping requirements, Securities.

Text of Rule Amendments

0
For the reasons set out in the preamble, we are amending Title 17, 
Chapter II of the Code of Federal Regulations as follows.

[[Page 16955]]

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND 
REQUESTS

0
1. The general authority citation for Part 200 is revised to read as 
follows:

    Authority: 15 U.S.C. 77o, 77s, 77sss, 78d, 78d-1, 78d-2, 78w, 
78ll(d), 78mm, 80a-37, 80b-11, and 7202, unless otherwise noted.
* * * * *

0
2. Amend Sec.  200.30-1 by adding paragraph (e)(17) to read as follows:


Sec.  200.30-1  Delegation of authority to Director of Division of 
Corporation Finance.

* * * * *
    (e) * * *
    (17) At the request of a foreign private issuer, pursuant to Rule 
12h-6 (Sec.  240.12h-6 of this chapter), to accelerate the termination 
of the registration of a class of securities under section 12(g) of the 
Act (15 U.S.C. 78l(g)) or the duty to file reports under section 13(a) 
of the Act (15 U.S.C. 78m(a)) or section 15(d) of the Act (15 U.S.C. 
78o(d)).
* * * * *

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

0
3. The authority citation for Part 232 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77sss(a), 
78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll(d), 80a-8, 80a-29, 80a-
30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350.
* * * * *

0
4. Amend Sec.  232.101 by:
0
a. Removing the word ``and'' at the end of paragraph (a)(1)(x);
0
b. Removing the period and adding ``; and'' at the end of paragraph 
(a)(1)(xi); and
0
c. Adding paragraph (a)(1)(xii).
    The addition reads as follows:


Sec.  232.101  Mandated electronic submissions and exceptions.

    (a) * * *
    (1) * * *
    (xii) Forms 15 and 15F (Sec.  249.323 and Sec.  249.324 of this 
chapter).
* * * * *

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

0
5. The general authority citation for Part 240 continues to read in 
part as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 
78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 
80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise 
noted.
* * * * *

0
6. Amend Sec.  240.12g3-2 by revising paragraphs (d)(1) and (d)(2) and 
adding paragraphs (e) and (f) to read as follows:


Sec.  240.12g3-2  Exemptions for American depositary receipts and 
certain foreign securities.

* * * * *
    (d) * * *
    (1) Securities of a foreign private issuer that has or has had 
during the prior eighteen months any securities registered under 
section 12 of the Act or a reporting obligation (suspended or active) 
under section 15(d) of the Act (other than arising solely by virtue of 
the use of Form F-7, F-8, F-9, F-10 or F-80), except as provided by 
paragraph (e) of this section;
    (2) Securities of a foreign private issuer issued in a transaction 
(other than a transaction registered on Form F-8, F-9, F-10 or F-80) to 
acquire by merger, consolidation, exchange of securities or acquisition 
of assets, another issuer that had securities registered under section 
12 of the Act or a reporting obligation (suspended or active) under 
section 15(d) of the Act, except as provided by paragraph (e) of this 
section; and
* * * * *
    (e)(1) A foreign private issuer that has filed a Form 15F (Sec.  
249.324 of this chapter) pursuant to Sec.  240.12h-6 shall receive the 
exemption provided by paragraph (b) of this section for a class of 
equity securities immediately upon the effectiveness of the termination 
of registration of that class of securities under section 12(g) of the 
Act (15 U.S.C. 78l(g)) or the termination of the duty to file reports 
regarding that class of securities under section 15(d) of the Act (15 
U.S.C. 78o(d)), or both.
    (2) Notwithstanding any provision of Sec.  240.12g3-2(b), in order 
to satisfy the conditions of the Sec.  240.12g3-2(b) exemption received 
under this paragraph (e), the issuer shall publish in English the 
information required under paragraph (b)(1)(iii) of this section on its 
Internet Web site or through an electronic information delivery system 
generally available to the public in its primary trading market, rather 
than furnish that information to the Commission.
    (3) The Sec.  240.12g3-2(b) exemption received under this paragraph 
(e) will remain in effect for as long as the foreign private issuer 
satisfies the electronic publication condition of paragraph (e)(2) of 
this section or until the issuer registers a class of securities under 
section 12 of the Act or incurs reporting obligations under section 
15(d) of the Act.
    (4) Notwithstanding the time period specified in Sec.  240.12g3-
2(d)(1), a foreign private issuer that filed a Form 15F solely with 
respect to a class of debt securities under section 15(d) of the Act 
(15 U.S.C. 78o(d)) may establish the exemption provided by paragraph 
(b) of this section for a class of equity securities upon the 
effectiveness of its termination of reporting regarding the class of 
debt securities.

    Notes to Paragraph (e): 1. In order to maintain the Sec.  
240.12g3-2(b) exemption obtained under this paragraph, at a minimum, 
a foreign private issuer shall electronically publish English 
translations of the following documents required to be furnished 
under paragraph (b)(1)(iii) of this section if in a foreign 
language:
    a. Its annual report, including or accompanied by annual 
financial statements;
    b. Interim reports that include financial statements;
    c. Press releases; and
    d. All other communications and documents distributed directly 
to security holders of each class of securities to which the 
exemption relates.
    2. As used in paragraph (e)(2) of this section, primary trading 
market has the same meaning as under Sec.  240.12h-6(f).
    3. A foreign private issuer that files a Form 15F regarding a 
class of equity securities shall disclose in the Form 15F the 
address of its Internet Web site or that of the electronic 
information delivery system in its primary trading market on which 
it will publish the information required under paragraph (b)(1)(iii) 
of this section. An issuer need not update the Form 15F to reflect a 
change in that address.
    4. A foreign private issuer that has filed a Form 15F solely 
with respect to a class of debt securities may establish the 
exemption under Sec.  240.12g3-2(b) regarding a class of equity 
securities by submitting an application to the Commission after 
filing its Form 15F. The issuer must provide in that application the 
date that it filed its Form 15F as well as the address of its 
Internet Web site or that of the electronic information delivery 
system in its primary trading market on which it will publish the 
information required under paragraph (b)(1)(iii) of this section.

    (f)(1) A foreign private issuer that, upon application to the 
Commission and not after filing a Form 15F, has obtained or will obtain 
the exemption under Sec.  240.12g3-2(b), may publish the information 
required under paragraph (b)(1)(iii) of this section on its Internet 
Web site or through an electronic information delivery system generally 
available to the public in its primary trading market, rather than 
furnish that information to the Commission, as long as it complies with 
the English translation requirements provided in paragraph (e) of this 
section.

[[Page 16956]]

    (2) Before a foreign private issuer may publish information 
electronically pursuant to this paragraph, it must provide the 
Commission with the address of its Internet Web site or that of the 
electronic information delivery system in its primary trading market in 
its application for the exemption under Sec.  240.12g3-2(b) or in an 
amendment to that application.

0
7. Amend Sec.  240.12g-4 by:
0
a. Removing the authority citations following the section; and
0
b. Revising paragraph (a) to read as follows:


Sec.  240.12g-4  Certifications of termination of registration under 
section 12(g).

    (a) Termination of registration of a class of securities under 
section 12(g) of the Act (15 U.S.C. 78l(g)) shall take effect 90 days, 
or such shorter period as the Commission may determine, after the 
issuer certifies to the Commission on Form 15 (17 CFR 249.323) that the 
class of securities is held of record by:
    (1) Less than 300 persons; or
    (2) Less than 500 persons, where the total assets of the issuer 
have not exceeded $10 million on the last day of each of the issuer's 
most recent three fiscal years.
* * * * *

0
8. Amend Sec.  240.12h-3 by:
0
a. Removing the authority citations following the section;
0
b. Adding the word ``and'' at the end of paragraph (b)(1)(ii);
0
c. Removing paragraph (b)(2), including the undesignated paragraph;
0
d. Redesignating paragraph (b)(3) as (b)(2);
0
e. Revising the cite ``paragraphs (b)(1)(ii) and (2)(ii)'' to read 
``paragraph (b)(1)(ii)'' in paragraph (c); and
0
f. Revising the phrase ``criteria (i) and (ii) in either paragraph 
(b)(1) or (2)'' to read ``either criteria (i) or (ii) of paragraph 
(b)(1)'' in paragraph (d).

0
9. Add Sec.  240.12h-6 to read as follows:


Sec.  240.12h-6  Certification by a foreign private issuer regarding 
the termination of registration of a class of securities under section 
12(g) or the duty to file reports under section 13(a) or section 15(d).

    (a) A foreign private issuer may terminate the registration of a 
class of securities under section 12(g) of the Act (15 U.S.C. 78l(g)), 
or terminate the obligation under section 15(d) of the Act (15 U.S.C. 
78o(d)) to file or furnish reports required by section 13(a) of the Act 
(15 U.S.C. 78m(a)) with respect to a class of equity securities, or 
both, after certifying to the Commission on Form 15F (17 CFR 249.324) 
that:
    (1) The foreign private issuer has had reporting obligations under 
section 13(a) or section 15(d) of the Act for at least the 12 months 
preceding the filing of the Form 15F, has filed or furnished all 
reports required for this period, and has filed at least one annual 
report pursuant to section 13(a) of the Act;
    (2) The foreign private issuer's securities have not been sold in 
the United States in a registered offering under the Securities Act of 
1933 (15 U.S.C. 77a et seq.) during the 12 months preceding the filing 
of the Form 15F, other than securities issued:
    (i) To the issuer's employees;
    (ii) By selling security holders in non-underwritten offerings;
    (iii) Upon the exercise of outstanding rights granted by the issuer 
if the rights are granted pro rata to all existing security holders of 
the class of the issuer's securities to which the rights attach;
    (iv) Pursuant to a dividend or interest reinvestment plan; or
    (v) Upon the conversion of outstanding convertible securities or 
upon the exercise of outstanding transferable warrants issued by the 
issuer;

    Note to Paragraph (a)(2): The exceptions in paragraphs 
(a)(2)(iii) through (v) do not apply to securities issued pursuant 
to a standby underwritten offering or other similar arrangement in 
the United States.

    (3) The foreign private issuer has maintained a listing of the 
subject class of securities for at least the 12 months preceding the 
filing of the Form 15F on one or more exchanges in a foreign 
jurisdiction that, either singly or together with the trading of the 
same class of the issuer' s securities in another foreign jurisdiction, 
constitutes the primary trading market for those securities; and
    (4)(i) The average daily trading volume of the subject class of 
securities in the United States for a recent 12-month period has been 
no greater than 5 percent of the average daily trading volume of that 
class of securities on a worldwide basis for the same period; or
    (ii) On a date within 120 days before the filing date of the Form 
15F, a foreign private issuer's subject class of equity securities is 
either held of record by:
    (A) Less than 300 persons on a worldwide basis; or
    (B) Less than 300 persons resident in the United States.

    Note to Paragraph (a)(4): If an issuer's equity securities trade 
in the form of American Depositary Receipts in the United States, 
for purposes of paragraph (a)(4)(i), it must calculate the trading 
volume of its American Depositary Receipts in terms of the number of 
securities represented by those American Depositary Receipts.

    (b) A foreign private issuer must wait at least 12 months before it 
may file a Form 15F to terminate its section 13(a) or 15(d) reporting 
obligations in reliance on paragraph (a)(4)(i) of this section if:
    (1) The issuer has delisted a class of equity securities from a 
national securities exchange or inter-dealer quotation system in the 
United States, and at the time of delisting, the average daily trading 
volume of that class of securities in the United States exceeded 5 
percent of the average daily trading volume of that class of securities 
on a worldwide basis for the preceding 12 months; or
    (2) The issuer has terminated a sponsored American Depositary 
Receipts facility, and at the time of termination the average daily 
trading volume in the United States of the American Depositary Receipts 
exceeded 5 percent of the average daily trading volume of the 
underlying class of securities on a worldwide basis for the preceding 
12 months.
    (c) A foreign private issuer may terminate its duty to file or 
furnish reports pursuant to section 13(a) or section 15(d) of the Act 
with respect to a class of debt securities after certifying to the 
Commission on Form 15F that:
    (1) The foreign private issuer has filed or furnished all reports 
required by section 13(a) or section 15(d) of the Act, including at 
least one annual report pursuant to section 13(a) of the Act; and
    (2) On a date within 120 days before the filing date of the Form 
15F, the class of debt securities is either held of record by:
    (i) Less than 300 persons on a worldwide basis; or
    (ii) Less than 300 persons resident in the United States.
    (d)(1) Following a merger, consolidation, exchange of securities, 
acquisition of assets or otherwise, a foreign private issuer that has 
succeeded to the registration of a class of securities under section 
12(g) of the Act of another issuer pursuant to Sec.  240.12g-3, or to 
the reporting obligations of another issuer under section 15(d) of the 
Act pursuant to Sec.  240.15d-5, may file a Form 15F to terminate that 
registration or those reporting obligations if:
    (i) Regarding a class of equity securities, the successor issuer 
meets the conditions under paragraph (a) of this section; or
    (ii) Regarding a class of debt securities, the successor issuer 
meets the conditions under paragraph (c) of this section.
    (2) When determining whether it meets the prior reporting 
requirement under paragraph (a)(1) or paragraph (c)(1) of this section, 
a successor issuer

[[Page 16957]]

may take into account the reporting history of the issuer whose 
reporting obligations it has assumed pursuant to Sec.  240.12g-3 or 
Sec.  240.15d-5.
    (e) Counting method. When determining under this section the number 
of United States residents holding a foreign private issuer's equity or 
debt securities:
    (1)(i) Use the method for calculating record ownership Sec.  
240.12g3-2(a), except that you may limit your inquiry regarding the 
amount of securities represented by accounts of customers resident in 
the United States to brokers, dealers, banks and other nominees located 
in:
    (A) The United States;
    (B) The foreign private issuer's jurisdiction of incorporation, 
legal organization or establishment; and
    (C) The foreign private issuer's primary trading market, if 
different from the issuer's jurisdiction of incorporation, legal 
organization or establishment.
    (ii) If you aggregate the trading volume of the issuer's securities 
in two foreign jurisdictions for the purpose of complying with 
paragraph (a)(3) of this section, you must include both of those 
foreign jurisdictions when conducting your inquiry under paragraph 
(e)(1)(i) of this section.
    (2) If, after reasonable inquiry, you are unable without 
unreasonable effort to obtain information about the amount of 
securities represented by accounts of customers resident in the United 
States, for purposes of this section, you may assume that the customers 
are the residents of the jurisdiction in which the nominee has its 
principal place of business.
    (3) You must count securities as owned by United States holders 
when publicly filed reports of beneficial ownership or other reliable 
information that is provided to you indicates that the securities are 
held by United States residents.
    (4) When calculating under this section the number of your United 
States resident security holders, you may rely in good faith on the 
assistance of an independent information services provider that in the 
regular course of its business assists issuers in determining the 
number of, and collecting other information concerning, their security 
holders.
    (f) Definitions. For the purpose of this section:
    (1) Debt security means any security other than an equity security 
as defined under Sec.  240.3a11-1, including:
    (i) Non-participatory preferred stock, which is defined as non-
convertible capital stock, the holders of which are entitled to a 
preference in payment of dividends and in distribution of assets on 
liquidation, dissolution, or winding up of the issuer, but are not 
entitled to participate in residual earnings or assets of the issuer; 
and
    (ii) Notwithstanding Sec.  240.3a11-1, any debt security described 
in paragraph (f)(3)(i) and (ii) of this section;
    (2) Employee has the same meaning as the definition of employee 
provided in Form S-8 (Sec.  239.16b of this chapter).
    (3) Equity security means the same as under Sec.  240.3a11-1, but, 
for purposes of paragraphs (a)(3) and (a)(4)(i) of this section, does 
not include:
    (i) Any debt security that is convertible into an equity security, 
with or without consideration;
    (ii) Any debt security that includes a warrant or right to 
subscribe to or purchase an equity security;
    (iii) Any such warrant or right; or
    (iv) Any put, call, straddle, or other option or privilege that 
gives the holder the option of buying or selling a security but does 
not require the holder to do so.
    (4) Foreign private issuer has the same meaning as under Sec.  
240.3b-4.
    (5) Primary trading market means that:
    (i) At least 55 percent of the trading in a foreign private 
issuer's class of securities that is the subject of Form 15F took place 
in, on or through the facilities of a securities market or markets in a 
single foreign jurisdiction or in no more than two foreign 
jurisdictions during a recent 12-month period; and
    (ii) If a foreign private issuer aggregates the trading of its 
subject class of securities in two foreign jurisdictions for the 
purpose of paragraph (a)(3) of this section, the trading for the 
issuer's securities in at least one of the two foreign jurisdictions 
must be larger than the trading in the United States for the same class 
of the issuer's securities.
    (6) Recent 12-month period means a 12-calendar-month period that 
ended no more than 60 days before the filing date of the Form 15F.
    (g)(1) Suspension of a foreign private issuer's duty to file 
reports under section 13(a) or section 15(d) of the Act shall occur 
immediately upon filing the Form 15F with the Commission if filing 
pursuant to paragraph (a), (c) or (d) of this section. If there are no 
objections from the Commission, 90 days, or such shorter period as the 
Commission may determine, after the issuer has filed its Form 15F, the 
effectiveness of any of the following shall occur:
    (i) The termination of registration of a class of securities under 
section 12(g); and
    (ii) The termination of a foreign private issuer's duty to file 
reports under section 13(a) or section 15(d) of the Act.
    (2) If the Form 15F is subsequently withdrawn or denied, the issuer 
shall, within 60 days after the date of the withdrawal or denial, file 
with or submit to the Commission all reports that would have been 
required had the issuer not filed the Form 15F.
    (h) As a condition to termination of registration or reporting 
under paragraph (a), (c) or (d) of this section, a foreign private 
issuer must, either before or on the date that it files its Form 15F, 
publish a notice in the United States that discloses its intent to 
terminate its registration of a class of securities under section 12(g) 
of the Act, or its reporting obligations under section 13(a) or section 
15(d) of the Act, or both. The issuer must publish the notice through a 
means reasonably designed to provide broad dissemination of the 
information to the public in the United States. The issuer must also 
submit a copy of the notice to the Commission, either under cover of a 
Form 6-K (17 CFR 249.306) before or at the time of filing of the Form 
15F, or as an exhibit to the Form 15F.
    (i)(1) A foreign private issuer that, before the effective date of 
this section, terminated the registration of a class of securities 
under section 12(g) of the Act or suspended its reporting obligations 
regarding a class of equity or debt securities under section 15(d) of 
the Act may file a Form 15F in order to:
    (i) Terminate under this section the registration of a class of 
equity securities that was the subject of a Form 15 (Sec.  249.323 of 
this chapter) filed by the issuer pursuant to Sec.  240.12g-4; or
    (ii) Terminate its reporting obligations under section 15(d) of the 
Act, which had been suspended by the terms of that section or by the 
issuer's filing of a Form 15 pursuant to Sec.  240.12h-3, regarding a 
class of equity or debt securities.
    (2) In order to be eligible to file a Form 15F under this 
paragraph:
    (i) If a foreign private issuer terminated the registration of a 
class of securities pursuant to Sec.  240.12g-4 or suspended its 
reporting obligations pursuant to Sec.  240.12h-3 or section 15(d) of 
the Act regarding a class of equity securities, the issuer must meet 
the requirements under paragraph (a)(3) and paragraph (a)(4)(i) or 
(a)(4)(ii) of this section; or
    (ii) If a foreign private issuer suspended its reporting 
obligations pursuant to Sec.  240.12h-3 or section 15(d) of the Act 
regarding a class of debt securities, the issuer must meet the

[[Page 16958]]

requirements under paragraph (c)(2) of this section.
    (3)(i) If the Commission does not object, 90 days after the filing 
of a Form 15F under this paragraph, or such shorter period as the 
Commission may determine, the effectiveness of any of the following 
shall occur:
    (A) The termination under this section of the registration of a 
class of equity securities, which was the subject of a Form 15 filed 
pursuant to Sec.  240.12g-4, and the duty to file reports required by 
section 13(a) of the Act regarding that class of securities; or
    (B) The termination of a foreign private issuer's reporting 
obligations under section 15(d) of the Act, which had previously been 
suspended by the terms of that section or by the issuer's filing of a 
Form 15 pursuant to Sec.  240.12h-3, regarding a class of equity or 
debt securities.
    (ii) If the Form 15F is subsequently withdrawn or denied, the 
foreign private issuer shall, within 60 days after the date of the 
withdrawal or denial, file with or submit to the Commission all reports 
that would have been required had the issuer not filed the Form 15F.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
10. 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
11. Add Sec.  249.324 to read as follows:


Sec.  249.324  Form 15F, certification by a foreign private issuer 
regarding the termination of registration of a class of securities 
under section 12(g) or the duty to file reports under section 13(a) or 
section 15(d).

    This form shall be filed by a foreign private issuer to disclose 
and certify the information on the basis of which it meets the 
requirements specified in Rule 12h-6 (Sec.  240.12h-6 of this chapter) 
to terminate the registration of a class of securities under section 
12(g) of the Act (15 U.S.C. 78l(g)) or the duty to file reports under 
section 13(a) of the Act (15 U.S.C. 78m(a)) or section 15(d) of the Act 
(15 U.S.C. 78(o)(d)). In each instance, unless the Commission objects, 
termination occurs 90 days, or such shorter time as the Commission may 
direct, after the filing of Form 15F.
0
12. Add Form 15F (referenced in Sec.  249.324) to read as follows:
    (Note: The text of Form 15F will not appear in the Code of 
Federal Regulations.)
OMB APPROVAL
    OMB Number: 3235-0621
    Expires:
    Estimated average burden hours per response--30.0

United States Securities and Exchange Commission

Washington, DC 20549

Form 15F--Certification of a Foreign Private Issuer's Termination of 
Registration of a Class of Securities Under Section 12(g) of the 
Securities Exchange Act of 1934 or its Termination of the Duty to File 
Reports Under Section 13(a) or Section 15(d) of the Securities Exchange 
Act of 1934

Commission File Number-------------------------------------------------
-----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
-----------------------------------------------------------------------

(Address, including zip code, and telephone number, including area 
code, of registrant's principal executive offices)
-----------------------------------------------------------------------

(Title of each class of securities covered by this Form)

Place an X in the appropriate box(es) to indicate the provision(s) 
relied upon to terminate the duty to file reports under the 
Securities Exchange Act of 1934:

Rule 12h-6(a) [ballot]
    (for equity securities)

Rule 12h-6(c) [ballot]
    (for debt securities)

Rule 12h-6(d) [ballot]
    (for successor registrants)

Rule 12h-6(i) [ballot]
    (for prior Form 15 filers)

General Instructions

A. Who May Use Form 15F and When

    1. A foreign private issuer may file Form 15F, pursuant to Rule 
12h-6(a) (17 CFR 240.12h-6(a)) under the Securities Exchange Act of 
1934 (``Exchange Act''), when seeking to terminate:
     The registration of a class of securities under section 
12(g) of the Exchange Act and the corresponding duty to file or 
furnish reports required by section 13(a) of the Exchange Act; or
     The obligation under section 15(d) of the Exchange Act 
to file or furnish reports required by section 13(a) of the Act 
regarding a class of equity securities; or
     Both.
    2. A foreign private issuer may file Form 15F, pursuant to Rule 
12h-6(c) (17 CFR 240.12h-6(c)), when seeking to terminate its 
reporting obligations under section 13(a) or section 15(d) of the 
Exchange Act regarding a class of debt securities.
    3. A foreign private issuer may file Form 15F, pursuant to Rule 
12h-6(d) (17 CFR 240.12h-6(d)), when seeking to terminate the 
registration of a class of securities under section 12(g), or 
reporting obligations under section 13(a) or section 15(d) of the 
Exchange Act, to which it has succeeded pursuant to Rule 12g-3 (17 
CFR 240.12g-3) or Rule 15d-5 (17 CFR 240.15d-5).
    4. A foreign private issuer may file Form 15F, pursuant to Rule 
12h-6(i) (17 CFR 240.12h-6(i)), if, before the effective date of 
Rule 12h-6, it terminated the registration of a class of securities 
under section 12(g) of the Act, or suspended its reporting 
obligations regarding a class of equity or debt securities under 
section 15(d) of the Act, in order to:
     Terminate under Rule 12h-6 the registration of a class 
of equity securities that was the subject of a Form 15 (Sec.  
249.323 of this chapter) filed by the issuer pursuant to Sec.  
240.12g-4; or
     Terminate its reporting obligations under section 15(d) 
of the Act, which had been suspended by the terms of that section or 
by the issuer's filing of a Form 15 pursuant to Sec.  240.12h-3, 
regarding a class of equity or debt securities.

B. Certification Effected by Filing Form 15F

    By completing and signing this Form, the issuer certifies that:
     It meets all of the conditions for termination of 
Exchange Act reporting specified in Rule 12h-6 (17 CFR 240.12h-6); 
and
     There are no classes of securities other than those 
that are the subject of this Form 15F regarding which the issuer has 
Exchange Act reporting obligations.

C. Effective Date

    For an issuer filing Form 15F under Rule 12h-6(a), (c) or (d), 
the duty to file any reports required under section 13(a) or 15(d) 
of the Exchange Act will be suspended immediately upon filing the 
Form 15F. If there are no objections from the Commission, 90 days, 
or within a shorter period as the Commission may determine, after 
the issuer has filed its Form 15F, there shall take effect:
     the termination of registration of a class of 
securities under section 12(g) of the Act;
     the termination of the issuer's duty to file or submit 
reports under section 13(a) or section 15(d) of the Act; or
     both.
    For an issuer that has already terminated its registration of a 
class of equity securities pursuant to Rule 12g-4 or suspended its 
reporting obligations under section 15(d) or Rule 12h-3, the 
effectiveness of its termination of section 12(g) registration under 
Rule 12h-6 and the corresponding duty to file reports required by 
section 13(a) of the Act, or the termination of its previously 
suspended reporting obligations under section 15(d) of the Act, 
shall also occur 90 days after the issuer has filed its Form 15F 
under Rule 12h-6(i), or within a shorter period as the Commission 
may determine, if there are no objections from the Commission.

D. Other Filing Requirements

    You must file Form 15F and related materials, including 
correspondence, in electronic format via our Electronic Data 
Gathering, Analysis, and Retrieval (EDGAR) system in accordance with 
the EDGAR rules set forth in Regulation S-T (17 CFR Part 232). The 
Form 15F and related materials must be in the English language as 
required by Regulation S-T Rule 306 (17 CFR 232.306). You must 
provide the signature required for Form 15F in accordance with 
Regulation S-

[[Page 16959]]

T Rule 302 (17 CFR 232.302). If you have technical questions about 
EDGAR, call the EDGAR Filer Support Office at (202) 551-8900. If you 
have questions about the EDGAR rules, call the Office of EDGAR and 
Information Analysis at (202) 551-3610.
    If the Form 15F is subsequently withdrawn or denied, you must, 
within 60 days after the date of the withdrawal or denial, file with 
or submit to the Commission all reports that would have been 
required had you not filed the Form 15F. See Rule 12h-6(g)(2) (17 
CFR 240.12h-6(g)(2)) and Rule 12h-6(i)(3)(ii) (17 CFR 240.12h-
6(i)(3)(ii)).

E. Rule 12g3-2(b) Exemption

    Regardless of the particular Rule 12h-6 provision under which it 
is proceeding, a foreign private issuer that has filed a Form 15F 
regarding a class of equity securities shall receive the exemption 
under Rule 12g3-2(b) (17 CFR 240.12g3-2(b)) for the subject class of 
equity securities immediately upon the effective date of its 
termination of registration and reporting under Rule 12h-6. Refer to 
Rule 12g3-2(e) (17 CFR 240.12g3-2(e)) for the conditions that a 
foreign private issuer must meet in order to maintain the Rule 12g3-
2(b) exemption following its termination of Exchange Act 
registration and reporting.

Part I

    The purpose of this part is to provide information to investors 
and to assist the Commission in assessing whether you meet the 
requirements for terminating your Exchange Act reporting under Rule 
12h-6. If, pursuant to Rule 12h-6, there is an item that does not 
apply to you, mark that item as inapplicable.

Item 1. Exchange Act Reporting History

    A. State when you first incurred the duty to file reports under 
section 13(a) or section 15(d) of the Exchange Act.
    B. State whether you have filed or submitted all reports 
required under Exchange Act section 13(a) or section 15(d) and 
corresponding Commission rules for the 12 months preceding the 
filing of this form, and whether you have filed at least one annual 
report under section 13(a).

Instruction to Item 1.

    If you are a successor issuer that has filed this Form 15F 
pursuant to Rule 12h-6(d), and are relying on the reporting history 
of the issuer to which you have succeeded under Rule 12g-3 (17 CFR 
12g-3) or Rule 15d-5 (17 CFR 240.15d-5), identify that issuer and 
provide the information required by this section for that issuer.

Item 2. Recent United States Market Activity

    State when your securities were last sold in the United States 
in a registered offering under the Securities Act of 1933 (15 U.S.C. 
77a et seq.) (``Securities Act'').

Instructions to Item 2.

    1. Do not include registered offerings involving the issuance of 
securities:
    a. to your employees, as that term is defined in Form S-8 (17 
CFR 239.16b);
    b. by selling security holders in non-underwritten offerings;
    c. upon the exercise of outstanding rights granted by the issuer 
if the rights are granted pro rata to all existing security holders 
of the class of the issuer's securities to which the rights attach;
    d. pursuant to a dividend or interest reinvestment plan; or
    e. upon the conversion of outstanding convertible securities or 
upon the exercise of outstanding transferable warrants issued by the 
issuer.
    However, you must include registered offerings described in 
paragraphs (c) through (e) of this instruction if undertaken 
pursuant to a standby underwritten offering or other similar 
arrangement in the United States.
    2. If you have registered equity securities on a shelf or other 
Securities Act registration statement under which securities remain 
unsold, disclose the last sale of securities under that registration 
statement. If no sale has occurred during the preceding 12 months, 
disclose whether you have filed a post-effective amendment to 
terminate the registration of unsold securities under that 
registration statement.

Item 3. Foreign Listing and Primary Trading Market

    A. Identify the exchange or exchanges outside the United States, 
and the foreign jurisdiction in which the exchange or exchanges are 
located, on which you have maintained a listing of the class of 
securities that is the subject of this Form, and which, either 
singly or together with the trading of the same class of the 
issuer's securities in another foreign jurisdiction, constitutes the 
primary trading market for those securities.
    B. Provide the date of initial listing on the foreign exchange 
or exchanges identified in response to Item 3.A. In addition, 
disclose whether you have maintained a listing of the subject class 
of securities on one or more of those foreign exchanges for at least 
the 12 months preceding the filing of this Form.
    C. Disclose the percentage of trading in the subject class of 
securities that occurred in the identified jurisdiction or 
jurisdictions of your foreign listing as of a recent 12-month 
period.

Instructions to Item 3

    1. When responding to this item, refer to the definition of 
``primary trading market'' in Rule 12h-6(f) (17 CFR 240.12h-6(f)). 
In accordance with that definition, if your primary trading market 
consists of two foreign jurisdictions, provide the information 
required by this section for both foreign jurisdictions. In 
addition, disclose whether the trading market for your securities in 
at least one of those two foreign jurisdictions is larger than the 
trading market for your securities in the United States as of the 
same recent 12-month period. Disclose the first and last days of 
that recent 12-month period.
    2. For the purpose of the primary trading market determination, 
you must measure the average daily trading volume of on-exchange 
transactions in the subject securities aggregated over one or two 
foreign jurisdictions against your worldwide trading volume. You may 
include in this measure off-exchange transactions in those 
jurisdictions comprising the numerator only if you include those 
off-exchange transactions when calculating worldwide trading volume 
in the denominator. This denominator should be the same as the 
denominator used for the trading volume benchmark under Rule 12h-
6(a)(4)(i) (17 CFR 240.12h-6(a)(4)(i)) and Item 4 of this Form.

Item 4. Comparative Trading Volume Data

    If relying on Rule 12h-6(a)(4)(i), provide the following 
information:
    A. Identify the first and last days of the recent 12-month 
period used to meet the requirements of that rule provision.
    B. For the same recent 12-month period, disclose the average 
daily trading volume of the class of securities that is the subject 
of this Form both in the United States and on a worldwide basis.
    C. For the same recent 12-month period, disclose the average 
daily trading volume of the subject class of securities in the 
United States as a percentage of the average daily trading volume 
for that class of securities on a worldwide basis.
    D. Disclose whether you have delisted the subject class of 
securities from a national securities exchange or inter-dealer 
quotation system in the United States. If so, provide the date of 
delisting, and, as of that date, disclose the average daily trading 
volume of the subject class of securities in the United States as a 
percentage of the average daily trading volume for that class of 
securities on a worldwide basis for the preceding 12-month period.
    E. Disclose whether you have terminated a sponsored American 
depositary receipt (ADR) facility regarding the subject class of 
securities. If so, provide the date of the ADR facility termination, 
and, as of that date, disclose the average daily trading volume of 
the subject class of securities in the United States as a percentage 
of the average daily trading volume for that class of securities on 
a worldwide basis for the preceding 12-month period.
    F. Identify the sources of the trading volume information used 
for determining whether you meet the requirements of Rule 12h-6. If 
you used more than one source, disclose the reasons why you used 
each source.

Instructions to Item 4

    1. ``Recent 12-month period'' means a 12-calendar-month period 
that ended no more than 60 days before the filing date of this form, 
as defined under Rule 12h-6(f). You may disclose the comparative 
trading volume data in response to this item in tabular format and 
attached as an exhibit to this Form.
    2. An issuer is ineligible to rely on paragraph (a)(4)(i) of 
Rule 12h-6 if, as of the date of delisting or termination of an ADR 
facility, the average daily trading volume of the subject class of 
securities in the United States exceeded 5 percent of the average 
daily trading volume of that class of securities on a worldwide 
basis, as measured over the preceding 12 months, and 12 months has 
not elapsed from the date of delisting or termination of the ADR 
facility. See Rule 12h-6(b) (17 CFR 240.12h-6(b)).
    3. For purposes of paragraph (a)(4)(i) of Rule 12h-6:
    a. when determining your U.S. average daily trading volume, you 
must include all

[[Page 16960]]

transactions, whether on-exchange or off-exchange;
    b. when determining your worldwide average daily trading volume, 
in addition to on-exchange transactions, which you must include, you 
may include off-exchange transactions; and
    c. the sources of your trading volume information may include 
publicly available sources, market data vendors or other commercial 
information service providers upon which you have reasonably relied 
in good faith, and as long as the information does not duplicate any 
other trading volume information obtained from exchanges or other 
sources.

Item 5. Alternative Record Holder Information

    If relying on Rule 12h-6(a)(4)(ii) (17 CFR 240.12h-6(a)(4)(ii)):
    Disclose the number of record holders of the subject class of 
equity securities on a worldwide basis or who are United States 
residents at a date within 120 days before filing this Form. 
Disclose the date used for the purpose of Item 5.

Item 6. Debt Securities

    If relying on Rule 12h-6(c) (17 CFR 240.12h-6(c)):
    Disclose the number of record holders of your debt securities 
either on a worldwide basis or who are United States residents at a 
date within 120 days before the date of filing of this Form. 
Disclose the date used for the purpose of Item 6.

Instructions to Items 5 and 6

    1. When determining the number of record holders of your equity 
or debt securities who are United States residents, refer to Rule 
12h-6(e) (17 CFR 240.12h-6(e)) for the appropriate counting method.
    2. If you have relied upon the assistance of an independent 
information services provider to determine the number of your United 
States equity or debt securities holders, identify this party in 
your response.

Item 7. Notice Requirement

    If filing Form 15F pursuant to Rule 12h-6(a), (c) or (d):
    A. Disclose the date of publication of the notice, required by 
Rule 12h-6(h) (17 CFR 240.12h-6(h)), disclosing your intent to 
terminate your duty to file reports under section 13(a) or 15(d) of 
the Exchange Act or both.
    B. Identify the means, such as publication in a particular 
newspaper or transmission by a particular wire service, used to 
disseminate the notice in the United States.

Instruction to Item 7

    If you have submitted a copy of the notice under cover of a Form 
6-K (17 CFR 249.306), disclose the submission date of the Form 6-K. 
If not, attach a copy of the notice as an exhibit to this Form. See 
Rule 12h-6(h).

Item 8. Prior Form 15 Filers

    If relying on Rule 12h-6(i):
    A. Disclose whether, before the effective date of Rule 12h-6, 
you filed a Form 15 (17 CFR 249.323) to terminate the registration 
of a class of equity securities pursuant to Rule 12g-4 (17 CFR 
240.12g-4) or to suspend your reporting obligations under section 
15(d) of the Act regarding a class of equity or debt securities 
pursuant to Rule 12h-3 (17 CFR 240.12h-3). If so, disclose the date 
that you filed the Form 15. If you suspended your reporting 
obligations by the terms of section 15(d), disclose the effective 
date of that suspension as well as the date that you filed a Form 15 
to notify the Commission of that suspension pursuant to Rule 15d-6 
(17 CFR 240.15d-6).
    B. If you terminated the registration of a class of securities 
pursuant to Rule 12g-4 or suspended your reporting obligations 
pursuant to Rule 12h-3 or by the terms of section 15(d) of the Act 
regarding a class of equity securities, provide the disclosure 
required by Item 3 of this Form, ``Primary Trading Market.'' Further 
provide the disclosure required by Item 4 of this Form, 
``Comparative Trading Volume Data,'' or the disclosure required by 
Item 5 of the Form, ``Alternative Record Holder Information.''
    C. If you suspended your reporting obligations pursuant to Rule 
12h-3 or by the terms of section 15(d) of the Act regarding a class 
of debt securities, provide the disclosure required by Item 6 of 
this Form, ``Debt Securities.''

Part II

Item 9. Rule 12g3-2(b) Exemption

    Disclose the address of your Internet Web site or of the 
electronic information delivery system in your primary trading 
market on which you will publish the information required under Rule 
12g3-2(b)(1)(iii) (17 CFR 240.12g3-2(b)(1)(iii)).

Instruction to Item 9

    Refer to Note 1 to Rule 12g3-2(e) for instructions regarding 
providing English translations of documents published pursuant to 
Rule 12g3-2(b)(1)(iii) (17 CFR 240.12g3-2(b)(1)(iii).

Part III

Item 10. Exhibits

    List the exhibits attached to this Form.

Instruction to Item 10

    In addition to exhibits specifically mentioned on this Form, you 
may attach as an exhibit any document providing information that is 
material to your eligibility to terminate your reporting obligations 
under Exchange Act Rule 12h-6. You should refer to any relevant 
exhibit when responding to the items on this Form.

Item 11. Undertakings

    Furnish the following undertaking:
    The undersigned issuer hereby undertakes to withdraw this Form 
15F if, at any time before the effectiveness of its termination of 
reporting under Rule 12h-6, it has actual knowledge of information 
that causes it reasonably to believe that, at the time of filing the 
Form 15F:
    (1) The average daily trading volume of its subject class of 
securities in the United States exceeded 5 percent of the average 
daily trading volume of that class of securities on a worldwide 
basis for the same recent 12-month period that the issuer used for 
purposes of Rule 12h-6(a)(4)(i);
    (2) Its subject class of securities was held of record by 300 or 
more United States residents or 300 or more persons worldwide, if 
proceeding under Rule 12h-6(a)(4)(ii) or Rule 12h-6(c); or
    (3) It otherwise did not qualify for termination of its Exchange 
Act reporting obligations under Rule 12h-6.

Instruction to Item 11

    After filing this Form, an issuer has no continuing obligation 
to make inquiries or perform other work concerning the information 
contained in this Form, including its assessment of trading volume 
or ownership of its securities in the United States.

Signature

    Pursuant to the requirements of the Securities Exchange Act of 
1934, [name of registrant as specified in charter] has duly 
authorized the undersigned person to sign on its behalf this 
certification on Form 15F. In so doing, [name of registrant as 
specified in charter] certifies that, as represented on this Form, 
it has complied with all of the conditions set forth in Rule 12h-6 
for terminating its registration under section 12(g) of the Exchange 
Act, or its duty to file reports under section 13(a) or section 
15(d) of the Exchange Act, or both.

    Dated: March 27, 2007.
    By the Commission.
Nancy M. Morris,
Secretary.
[FR Doc. E7-5947 Filed 4-4-07; 8:45 am]
BILLING CODE 8010-01-P