SEC Amends Rule 12g3-2(b) Exemption for Foreign Private Issuers
September 8, 2008
On August 27, 2008, the SEC approved amendments to Rule 12g3-2(b) which change the eligibility and disclosure requirements applicable to those FPIs relying on the rule for exemption from Exchange Act registration. The exemption allows a FPI to have its equity securities traded on a limited basis in the over-the-counter market in the United States although it exceeds the registration thresholds of Section 12(g). Under the amended rule, FPIs who meet the specified criteria will automatically be granted an exemption from the Exchange Act and will no longer be required to make a written application and subsequent home country document submission process in order to qualify for the exemption. To claim the Rule 12g3-2(b) exemption, a FPI must have:
- No current obligation to be registered under the Exchange Act, either due to listing its stock on a U.S. stock exchange or making a registered public offering in the United States. (Unlike the current rule, amended Rule 12g3-2(b) will not require a company to look back over the past 18 months and determine whether it had any active or suspended SEC reporting obligations during that period.)
- Listed the subject class of equity securities on one or more foreign exchanges that are its “primary trading market[s].” The primary trading market[s], which can mean up to two foreign exchanges located in no more than two different jurisdictions outside the U.S., must represent, in the aggregate, at least 55% of the worldwide average daily trading volume (ADTV) of that class of equity securities during the company’s most recently completed fiscal year. If the company aggregates its non-U.S. ADTV in two foreign markets to satisfy this test, the ADTV in one of these markets must be greater than the U.S. ADTV of the subject class of equity securities.
- Published in English specified non-U.S. disclosure documents, including its annual and interim reports containing home-country financial statements, since the beginning of the company’s most recently completed fiscal year, on the company’s own Internet Web site or through an electronic information delivery system generally available to the public in the company’s primary trading market.
In order to maintain its Rule 12g3-2(b)-exempt status, a FPI must continue to meet all of the three conditions described above. The amendment provides for a three-year transition period to permit current Rule 12g3-2(b)-exempt companies to comply with the new requirements.
http://www.sec.gov/rules/final/2008/34-58465.pdf
http://www.sec.gov/news/speech/2008/spch082708ebs.htm
For more information, contact:
Kara L. MacCullough
305.789.7548
kara.maccullough@hklaw.com
Esther L. Moreno
305.789.7442
esther.moreno@hklaw.com
toll free: 1.888.688.8500
About Our Public Companies and Securities Practice
About Our Securities Litigation Practice