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.

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 101² of Regulation S-T,³ and Rules 12g3-2, 12g-4 and 12h-3⁴ under the Exchange Act,⁵ and adding new Rule 12h-6⁶ and Form 15F⁷ under the Exchange Act.

Table of Contents

I. Executive Summary and Background

A. Introduction

In December 2005, the Commission issued proposed amendments to its current rules governing when a foreign private issuer⁸ 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)¹⁰or 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

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 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.

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.

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

B. Principal Comments Regarding the Reproposed Rule Amendments

We received 30 comment letters in response to the reproposed rule amendments.²⁰These 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.

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) facility²¹ during the preceding 12 months, regardless of whether the issuer met the trading volume benchmark at the time of termination;
• 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-2²² would constitute an Exchange Act annual report for the purpose of the reproposed prior reporting condition;
• 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;
• 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 issuer that delists from its non-U.S. exchange in connection with being acquired;
• 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;
• 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 15F²⁶ 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.

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;
• 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
• 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 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;
• 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 condition³⁰ 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).

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.

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.³³Because a public float benchmark would require such a determination to varying degrees, most commenters agreed with our conclusion that the reproposed trading volume-based benchmark should result in reduced costs to issuers in determining whether they can terminate their Exchange Act reporting obligations.³⁴

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

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

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

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

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.

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

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 commenters⁴⁷ urged the Commission to permit an issuer to include "off-market" transactions when determining whether it meets the 5 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,⁴⁹scheduled 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

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.⁵²These 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

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

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,⁵⁶pursuant 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.

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

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

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.⁶⁴Moreover, 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 rules purpose of reducing the disincentive to U.S. registration that may be caused by the current exit regime.

iv. Definition of Equity Securities

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 commenters⁶⁶ requested that the Commission exclude equity-linked securities from the definition of equity 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

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 issuers 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:

• 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

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:

• 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

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

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 Commissions 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

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 the securities of the subject foreign company.

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

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

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 commenter⁸⁰requested 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.

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-6s 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

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

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 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

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.

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.

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 EDGAR⁹¹and 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.

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.

Another commenter⁹³ 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.

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.

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:

• 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.⁹⁷Most 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 Act during the dormancy period. The permitted category of securities will include sales pursuant to section 4(2),⁹⁹Regulation 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

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.

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

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.

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-8¹⁰⁷ 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.

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

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

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.

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

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

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

Some commenters requested that we revise the 300-holder standard for termination of a foreign private issuers 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

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

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

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 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

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

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

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.

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

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-6s equity securities conditions, which includes the dormancy condition.¹⁴³

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.¹⁴⁵More 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.

Therefore, we are clarifying that Rule 12h-6(d) permits a successor issuer to consider an acquired companys 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 issuers 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.

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:

• 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

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

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.

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.

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.

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 service, used to disseminate the notice in the United States.¹⁵⁶

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:

• 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

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

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

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.

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.

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

We are adopting, substantially as reproposed, an amendment to Exchange Act Rule 12g3-2¹⁶⁴ 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

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 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

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

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

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.

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.

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.

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).

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 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.

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

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.

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.

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

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.

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 701¹⁸⁵ 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.

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.

III. PAPERWORK REDUCTION ACT ANALYSIS

The final rule amendments contain "collection of information" requirements within the meaning of the Paperwork Reduction Act of 1995 ("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.

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 Ac