Securities Act Release No. 5828

Exchange Act Release No. 13564

Accounting Series Release No. 218

42 F.R. 27879

May 23, 1977

Quarterly Reporting Requirements for Life Insurance Companies.

ACTION: Final Amendments of Rules.

SUMMARY: These amendments correct errors in the text of amendments of rules adopted in Accounting Series Release No. 197. In addition, they prescribe requirements for the interim financial information to be presented in notes to financial statements by foreign private issuers which file Form 6-K rather than Form 10-Q.

 EFFECTIVE DATE: Effective for reports filed for interim periods in fiscal years beginning after December 25, 1976.

FOR FURTHER INFORMATION CONTACT: Edward R. Cheramy, Office of the Chief Accountant, Securities and Exchange Commission, 500 North Capitol Street, Washington, D.C. 20549, (202) 376-8020.

SUPPLEMENTARY INFORMATION: On February 28, 1977, the Commission issued Securities Exchange Act Release No. 13309 [42 FR 13122] which proposed to correct errors in previously published amendments of rules and prescribed requirements for the interim financial information to be presented in notes to financial statements by certain foreign private issuers. (This release was corrected by a notice of correction appearing at 42 FR 15072.)

The Commission considered the comments received and has determined to adopt the amendments of the rules as proposed.

Background

On September 20, 1976 the Commission issued Accounting Series Release No. 197 [41 FR 42645] adopting amendments of rules to require increased disclosure of interim financial data by life insurance companies and related holding companies.

Subsequent to publication of the release three errors were noted in the text of the amendments adopted. This release corrects those errors. In addition, a technical amendment relating to foreign private issuers which file Form 6-K [17 CFR 249.305] rather than Form 10-Q [17 CFR 249.308a] is also adopted.

The first correction is in Regulation S-X, Rule 3-16 [17 CFR 210.3-16] in which the reference in paragraph (t)(1)(i)(C)(v)(a) to subsection (d) is changed to subsection (iv).

The other changes relate to the exemptions from the requirements to file quarterly reports on Form 10-Q in Rules 13a-13 and 15d-13 under the Securities Exchange Act of 1934 [17 CFR 240.13a-13 and 240.15d-13]. The Commissions intention when issuing ASR 197 was to require "actively traded" life insurance companies and related holding companies to begin filing Form 10-Q in 1977 and other life insurers in 1978 (with a reconsideration of these less actively traded companies by September 30, 1977). "Actively traded" for these purposes was to include those "listed" life insurance companies (with securities registered under Section 12(b) of the Securities Exchange Act of 1934) and those companies whose shares are traded over-the-counter which meet the specific criteria of Rule 3-16(t) [17 CFR 210.3-16]. An error was made in drafting the exemptive language of Rules 13a-13 and 15d-13 [17 CFR 240.13a-13 and 15d-13]. As previously written these rules could have been interpreted to not require the filing of Form 10-Q by life insurance companies and holding companies having only life insurance subsidiaries which are listed on a national exchange (i.e., Section 12(b) securities). This interpretation was not the Commissions intent.

Because the impact of these corrections is limited to only a few companies, and because the Commissions intent to require life insurance companies and their related holding companies whose securities are registered under Section 12(b) of the Securities Exchange Act of 1934 (i.e., listed on a national exchange) to file Form 10-Qs beginning in 1977 was previously expressed in ASR 197, the Commission is not changing the effective date of the requirements of Rules 13a-13 and 15d-13 [17 CFR 240.13a-13 and 15d-13]. As previously published the requirements of these rules regarding life insurance companies and related holding companies are effective for reports filed for quarterly periods in fiscal years beginning after December 25, 1976.

Technical Amendment

The impact of the disclosure requirements of Rule 3-16(t) of Regulation S-X [17 CFR 210.3-16] on certain foreign private issuers was unforeseen at the time of its adoption.

Rule 15d-13 [17 CFR 240.15d-13] provides for an exemption from Form 10-Q reporting for registrants subject to the reporting requirements of Form 6-K. Rule 15d-16 [17 CFR 240.15d-16] governs the applicability of Form 6-K and requires reporting thereon by "every foreign private issuer," with several enumerated exceptions. Form 6-K calls for reporting to the Commission on a current basis of certain information, including interim financial information, which has been made public pursuant to foreign law, filed with a foreign stock exchange, or distributed to the security holders. Thus, foreign registrants, with a few limited exceptions, are not required to report interim financial information on Form 10-Q, nor on Form 6-K unless the information has otherwise been compiled and made available to the specific parties.

The Commission believes that to require certain foreign private issuers (i.e., those that file on Form 6-K) to provide data pursuant to Rule 3-16(t) [17 CFR 210.3-16] that they do not otherwise provide would be inconsistent with the present requirements of Form 6-K and possibly could create an unreasonable reporting burden on such issuers. An amendment to the rule, by addition of new paragraph (t)(6), is therefore adopted to exempt foreign registrants from the application of that rule, except to the extent that the information called for in the rule has been furnished the Commission. Thus amended, the rule will require disclosure in the annual reports of foreign registrants of interim financial information required to be reported to the Commission on Form 6-K. The content of the disclosures will conform to the extent practicable with the existing requirements of paragraphs (1) through (4) of Rule 3-16(t).

Text of Amendments

Commission Action:

The Commission hereby adopts amendments to §210.3-16 and §§240.13a-13 and 15d-13, Title 17, Chapter II, Code of Federal Regulations, as given below.

1. In Part 210 (Regulation S-X), §210.3-16 is amended by changing the reference to (d) in paragraph (t)(1)(i)(C)(v)(a) to (iv) and adding a new paragraph (t)(6) as follows:

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2. In Part 240, §240.13a-13 and §240.15d-13 are amended by revising paragraphs (c)(1) thereof to read as follows:

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These amendments are adopted pursuant to authority in Sections 12, 13, 15(d) and 23(a) [15 U.S.C. 78l, 78o(d) and 78w] of the Securities Exchange Act of 1934. Pursuant to Section 23(a) of the Exchange Act, the Commission has considered the effect that the amendments would have on competition and has concluded that, to the extent the amendments impose burdens on competition, such burdens are necessary and appropriate in furtherance of the purpose of the securities laws.

By the Commission.