\42\ Note 1 to Exchange Act Rule 12g32(e).

The March 2007 amendments also provide that, for a foreign private issuer that electronically publishes its nonU.S. disclosure documents, the Rule 12g32(b) exemption remains in effect for as long as the issuer fulfills the ongoing nonU.S. disclosure requirement, or until the issuer registers a class of securities under Section 12 of the Exchange Act or incurs reporting obligations under Section 15(d) of the Exchange Act.\43\ This is consistent with the Commission's treatment of issuers making paper submissions under Rule 12g32(b).
\43\ 15 U.S.C. 78o(d).

C. Proposed Rule 12g32 Amendments

Since the initial adoption of Rule 12g32(b) four decades ago, the globalization of securities markets, advances in information technology, the increased use of ADR facilities by foreign companies to trade their securities in the United States, and other factors have increased significantly the number of foreign companies that have engaged in crossborder activities, as well as increased the amount of U.S. investor interest in the securities of foreign companies. These developments led us recently to reevaluate and revise the Commission rules governing when a foreign private issuer may terminate its Exchange Act registration and reporting obligations.\44\
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We believe these same factors warrant reconsidering the Commission rules that determine when a foreign private issuer must enter the Section 12(g) regime as well.
\44\ Several commenters on Rule 12h6 encouraged the Commission to address the registration requirements under Section 12(g) for foreign private issuers as well as the rules relating to termination of Exchange Act registration and reporting.

We propose to amend Exchange Act Rule 12g32 to permit a foreign private issuer to claim the Rule 12g32(b) exemption, without having to submit an application to the Commission, as long as:

All foreign private issuers that met the above requirements would be immediately exempt from Exchange Act registration under Rule 12g3 2(b) without having to apply to, or otherwise notify, the Commission, concerning the exemption. Thus, a foreign private issuer that exceeds the 300 U.S. holder threshold could automatically claim the exemption as long as it is not otherwise subject to Exchange Act reporting, meets the foreign listing condition, has 20 percent or less of its worldwide trading market in the United States, and electronically publishes the specified nonU.S. disclosure documents, as required under the proposed amendments.\46\
\46\ An issuer that has fewer than 300 U.S. resident
shareholders would continue to be exempt from Exchange Act registration without any other conditions unless it also sought to establish the Rule 12g32(b) exemption.

An issuer could also immediately claim the Rule 12g32(b) exemption upon the effectiveness of, or following its recent Exchange Act deregistration, whether pursuant to Rule 12g4, 12h3, or 12h6, or the suspension of its reporting obligations under Section 15(d),\47\ if it met the above requirements absent the electronic publication condition for its most recently completed fiscal year. Since a recently deregistered company will already have filed its Exchange Act reports on EDGAR for its most recently completed fiscal year, such a prior year publication requirement is not necessary to protect investors. \47\ An issuer may suspend its Section 15(d) reporting obligations under Rule 12h3 or Section 15(d) itself. The statutory section provides that suspension occurs if, on the first day of the fiscal year, other than the year in which the issuer's registration statement went effective, the issuer's record holders number less than 300.

Like the March 2007 amendments, the proposed rules would require any issuer, whether a prior registrant or not, to maintain the Rule 12g32(b) exemption by publishing, on an ongoing basis and for each subsequent fiscal year, in English, on its Internet Web site or through an electronic information delivery system generally available to the public in its primary trading market, the information specified for its last fiscal year. The proposed rules would require the electronic publication in English of the same types of information required under the March 2007 amendments.

The proposed rules provide that the Rule 12g32(b) exemption will remain in effect for as long as a foreign private issuer satisfies the electronic publication condition, or until:

By requiring the electronic publication in English of specified nonU.S. disclosure documents for an issuer claiming the Rule 12g32(b) exemption, the proposed amendments should make it easier for U.S. investors to gain access to a foreign private issuer's material non U.S. disclosure documents, and make better informed decisions regarding whether to invest in that issuer's equity securities through the over thecounter market in the United States or otherwise. Thus, the proposed amendments should foster increased efficiency in the trading of the issuer's securities for U.S. investors.

By enabling a qualified foreign private issuer to claim the Rule 12g32(b) exemption automatically, and without regard to the number of its U.S. shareholders, the proposed rule amendments should encourage more foreign private issuers to claim the Rule 12g32(b) exemption. That would enable the establishment of additional ADR facilities, make it easier for brokerdealers to fulfill their obligations under Exchange Act Rule 15c211 to investors with respect to the equity securities of a nonreporting foreign company, and facilitate the resale of a foreign company's securities to QIBs in the United States under Securities Act Rule 144A. Consequently, the proposed rule amendments should foster the increased trading of a foreign company's securities in the U.S. overthecounter market, which could benefit investors.
II. Discussion

A. Proposed NonReporting Condition

Proposed Exchange Act Rule 12g32(b) would require a foreign private issuer to have no reporting obligations under Exchange Act Section 13(a) or 15(d) as a condition to the exemption under the Rule.\48\ Like the current nonExchange Act reporting condition of Rule 12g32(b),\49\ the purpose of this provision is to prevent an issuer from claiming the Rule 12g32(b) exemption when it already has incurred active Exchange Act reporting obligations.
\48\ Proposed Exchange Act Rule 12g32(b)(1).
\49\ Rule 12g32(d)(1) (17 CFR 240. 12g32(d)(1)).

1. NonReporting Issuers

A foreign private issuer would satisfy the proposed nonreporting condition if it did not already have reporting obligations under either Exchange Act Section 13(a) or 15(d). Since Section 13(a) imposes reporting obligations on an issuer that has registered a class of securities under Section 12, a foreign private issuer that has an effective registration statement filed with the Commission under Section 12(b), for
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example, covering a class of debt securities, or Section 12(g), covering a particular class of equity securities, would be ineligible to claim the exemption. This treatment is consistent with the current Exchange Act reporting prohibition under Rule 12g32(b).\50\ \50\ Exchange Act Rule 12g32(d)(1).

Currently an issuer may apply for the Rule 12g32(b) exemption, although it may have exceeded the Section 12(g) shareholder thresholds on the last day of its most recently completed fiscal year, as long as the statutory 120day period for filing a Section 12(g) registration statement has not lapsed.\51\ We propose to eliminate this 120day submission requirement because, under the proposed revised Rule 12g3 2(b) exemptive scheme, we do not believe that this requirement is necessary to protect investors.

\51\ Exchange Act Rule 12g32(b)(2).

The proposed revised exemptive scheme does not depend on an issuer's determination of the number of its worldwide or U.S. shareholders, and does not require that it submit a written application disclosing that information. Instead, it requires a foreign private issuer to satisfy a U.S. trading volume standard measured for its most recently completed fiscal year, meet a foreign listing requirement, and electronically publish specified material nonU.S. disclosure documents in English. If we also required an issuer to claim the exemption within the 120day period, we believe some issuers, particularly smaller ones, would be unable to meet that deadline.\52\ Assuming that those issuers continued to satisfy the other conditions to Rule 12g32(b), they would have to wait until the end of their current fiscal year and the start of a new 120day period before they could claim the exemption. We see little benefit in making investors wait several months before being able to gain electronic access to the issuer's material nonU.S. disclosure documents in English.
\52\ Under current Rule 12g32(b), several issuers have requested Commission staff to accept their applications although the 120day period has lapsed.

As is currently the case, an issuer that, on the last day of its most recently completed fiscal year, has not exceeded the 500 worldwide holder threshold under Exchange Act Section 12(g), the 300 U.S. holder threshold under Rule 12g32(a), or the $10 million annual asset threshold under Rule 12g1, could claim an exemption from Section 12(g) registration for a class of equity securities based upon one or more of those provisions, and would not have to comply with Rule 12g32(b)'s conditions, if it chose not to rely on that rule for its exemption from Section 12(g) registration. However, such an issuer would have to claim the Rule 12g32(b) exemption, and satisfy all of its conditions, if it sought to have established an ADR facility for its equity securities. ADRs must be registered on a Form F6, which requires an issuer of the deposited securities to be either an Exchange Act reporting company or have the Rule 12g32(b) exemption.

2. Deregistered Issuers

A foreign private issuer that has suspended its Exchange Act reporting obligations upon the filing of Form 15, pursuant to Rule 12g 4 or 12h3, or Form 15F, pursuant to Rule 12h6, would satisfy the non reporting requirement upon the effectiveness of its deregistration, assuming that it had not otherwise incurred additional Exchange Act reporting obligations. Similarly, a foreign private issuer that suspended its reporting obligations pursuant to the statutory terms of Section 15(d) would satisfy the nonreporting condition immediately upon its determination that it had less than 300 shareholders as of the beginning of its most recent fiscal year.

Thus, unlike the current rule, the proposed provision would not require an issuer to look back over the previous eighteen months and determine whether it had Exchange Act reporting obligations during that period.\53\ We eliminated the eighteen month requirement when adopting the March 2007 rule amendments that granted the Rule 12g32(b) exemption automatically to a foreign private issuer upon the effectiveness of its termination of Exchange Act registration and reporting pursuant to Rule 12h6. We see no reason to treat differently foreign private issuers that have terminated their Section 12(g) registration under the older Rule 12g4 following the filing of a Form 15.\54\ Elimination of a lengthy waiting period would help hasten the publishing of a foreign private issuer's nonU.S. disclosure documents required under the exemption and, thus, help improve the ability of U.S. investors to make informed decisions regarding that issuer's securities.
\53\ Exchange Act Rule 12g32(d)(1) provides that the Rule 12g3 2(b) exemption is generally not available to a foreign private issuer that, during the preceding 18 months, has registered a class of securities under Exchange Act Section 12 or had an active or suspended Section 15(d) reporting obligation.
\54\ Although a qualifying prior Form 15 filer may terminate its Exchange Act registration and reporting under Rule 12h6, only a small number have done so.

For the same reason, proposed Rule 12g32(b) would eliminate the current rule's general prohibition against making the exemption available to an issuer that has had active or suspended reporting obligations under Section 15(d) during a prescribed period.\55\ The current rule precludes any issuer that suspended its reporting obligations under Section 15(d) from ever being able to obtain the Rule 12g32(b) exemption, no matter how much time has elapsed from the effectiveness of its suspension. We permitted an issuer to claim the Rule 12g32(b) exemption immediately upon the effectiveness of its deregistration under Rule 12h6, although its reporting obligations derived from Section 15(d). Similarly, we propose that an otherwise eligible issuer could claim the Rule 12g32(b) exemption upon the effectiveness of the suspension of its reporting obligations under Section 15(d) or pursuant to Rule 12h3 and following the filing of a Form 15. As long as it has not once again incurred active Section 15(d) reporting obligations,\56\ an issuer would be able to claim the Rule 12g32(b) exemption and publish its nonU.S. disclosure documents accordingly.
\55\ Rule 12g32(d)(1). Unlike under Section 12(g) and Rule 12g 4, an issuer can only suspend, and cannot terminate, its reporting obligations under Section 15(d) and Rule 12h3.
\56\ Following deregistration, an issuer would once again incur Section 15(d) reporting obligations upon the effectiveness of a new Securities Act registration statement.

Comment Solicited

We solicit comment on the proposed nonExchange Act reporting condition.

B. Proposed Foreign Listing Condition

As a second condition to the use of the Rule 12g32(b) exemption, the proposed amendments would require an issuer currently to maintain 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 those securities. These proposed rule amendments are substantially similar to the foreign listing condition and definition of primary trading market adopted as part of the March 2007 amendments.\57\
\57\ Exchange Act Rule 12h6(a)(3) (17 CFR 240.12h6(a)(3)) and Exchange Act Rule 12h6(f)(5) (17 CFR 240.12h6(f)(5)).

The purpose of the foreign listing condition is to help assure that there is a nonU.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 makes more likely the availability of a set of nonU.S. securities disclosure documents to which a U.S. investor may turn for material information when making investment decisions about the issuer's securities in the U.S. overthecounter market. This foreign listing condition is also consistent with the Commission staff's past and current practice of administering the Rule 12g32(b) exemption.

The proposed rule amendments define primary trading market to mean that at least 55 percent of the trading in the issuer's subject class of securities took place in, on or through the facilities of a securities market or markets in a single foreign jurisdiction or in no more than two foreign jurisdictions during the issuer's most recently completed fiscal year. The proposed amendments further instruct that, if a foreign private issuer aggregates the trading of its subject class of securities in two foreign jurisdictions for the purpose of this paragraph, 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.

Like the 2007 amendments, the proposed amendments would permit an issuer to aggregate its securities over multiple markets in one or two foreign jurisdictions in recognition that many foreign private issuers have listings on more than one exchange in one or more nonU.S. markets. Unlike the earlier amendments, however, the proposed rule amendments would not require an issuer establishing the exemption, but not deregistering, to have maintained a foreign listing for the previous twelve months, or for some other specified period of time, since we see no reason to exclude newly listed foreign companies from eligibility. We note that many foreign exchanges require substantial initial disclosure before a listing is accepted. In addition, there is currently no similar requirement for a nonreporting company applying for the Rule 12g32(b) exemption.

Under Rule 12h6, an issuer must certify that, at the time it files its Form 15F,\58\ it meets that rule's foreign listing requirement. That issuer would also have to meet the proposed foreign listing requirement upon the effectiveness of its Exchange Act termination of registration and reporting under Rule 12h6 in order to be able to claim the Rule 12g32(b) exemption. Since typically that effectiveness occurs 90 days from the date of filing of the Form 15F, we expect most Form 15F filers will satisfy the proposed foreign listing requirement under Rule 12g32(b).\59\
\58\ 17 CFR 249.324. Similar to a Form 15, Form 15F is the form that a foreign private issuer must file to certify that it meets the conditions for terminating its Exchange Act registration and reporting obligations under Rule 12h6.
\59\ Unless the Commission objects, termination of an issuer's reporting and registration under Rule 12h6 is effective 90 days after the filing of its Form 15F. Exchange Act Rule 12h6(g)(1) (17 CFR 240.12h6(g)(1)).

Comment Solicited

We solicit comment on the proposed foreign listing condition.

1. Trading Volume Benchmark

Proposed Rule 12g32(b) would permit an otherwise eligible issuer to claim an exemption from Section 12(g) registration by meeting a quantitative standard that does not depend on a count of the issuer's U.S. holders. Under the proposed rule amendments, regardless of the number of its U.S. holders, an issuer would be eligible to claim the Rule 12g32(b) exemption if the average daily trading volume of the subject class of securities in the United States for the issuer's most recently completed fiscal year has been no greater than 20 percent of the average daily trading volume of that class of securities on a worldwide basis for the same period.\60\

\60\ Proposed Exchange Act Rule 12g32(b)(3)(i).

We adopted a trading volume benchmark as part of the 2007 amendments concerning foreign deregistration because we believed it to be a more direct and less costly measure of the relative U.S. market interest in a foreign private issuer's securities than one based on a count of the issuer's shareholders.\61\ We believe the same considerations apply to the proposed amendments of the rules that determine when a foreign private issuer must register a class of equity securities under Section 12(g). If only 20 percent or less of an issuer's worldwide trading volume occurs in the United States, we believe the relative U.S. market interest in those securities does not warrant subjecting the issuer to Exchange Act reporting requirements. \61\ See Release No. 3455540, Parts I.A and II.A.1.a.ii. We also adopted a 20 percent trading volume benchmark in the definition of ``substantial U.S. market interest'' under Regulation S. See 17 CFR 230.902(j).

The 2007 amendments established a trading volume standard that permits a qualified foreign private issuer to terminate its Exchange Act registration and reporting obligations if its U.S. average daily trading volume is no greater than 5 percent of its worldwide average daily trading volume. We believe it is appropriate to have a stricter trading volume standard for determining when an issuer may exit the Exchange Act registration and reporting regime compared to when it must enter that regime. In the former instance, an issuer has availed itself of U.S. market facilities and filed Exchange Act reports upon which U.S. investors have relied. A similar relationship exists between the current shareholderbased standards governing entrance into and exit from the Exchange Act reporting regime.\62\
\62\ Compare Exchange Act Section 12(g)'s 500 or greater shareholder standard compelling registration with the less than 300 U.S. or worldwide shareholder standard permitting deregistration under Exchange Act Rules 12h6, 12g4 and 12h3.

The proposed rule amendments would require an issuer to calculate U.S. and worldwide trading volume in the same fashion as under Rule 12h6.\63\ Under that rule, when determining its U.S. average daily trading volume, an issuer must include all transactions, whether on exchange or offexchange. When determining its worldwide average daily trading volume, an issuer must include onexchange transactions, and may include offexchange transactions. The sources of trading volume information may include publicly available sources, market data vendors or other commercial information service providers upon which an issuer has reasonably relied in good faith, and as long as the information does not duplicate any other trading volume information obtained from exchanges or other sources.
\63\ The instructions for calculating trading volume are set forth in Instruction 3 to Item 4 of Form 15F and in Release No. 34 55540, Part II.A.1.a.ii.

The proposed amendments would require an issuer to measure its trading volume for its most recently completed fiscal year. In contrast, Rule 12h6 enables an issuer to make its trading volume determinations for a recent 12month period, which is defined as a 12 calendarmonth period that ended no more than 60 days before the filing date of an issuer's Form 15F.\64\ A rolling 12month period is appropriate in the context of deregistration since the relevant rules do not require an eligible issuer to deregister within a particular time frame. However, we are not proposing a similar rolling 60day window for the Rule 12g32 amendments since Section 12(g) posits the last day of an issuer's fiscal year as the measuring date for determining whether an issuer must register a class of securities under that statutory section.
\64\ Exchange Act Rule 12h6(f)(6) (17 CFR 240.12h6(f)(6)). 2. Rule 12h6 Issuers

An issuer that terminates its Exchange Act registration and reporting regarding a class of equity securities under Rule 12h6 must meet either that rule's trading volume benchmark or its record holder standard.\65\ Rule 12h6's trading volume standard requires an issuer's U.S. trading volume to be no greater than 5 percent of its worldwide trading volume, and to be measured over a recent 12month period.\66\ Rule 12h6's alternative record holder standard requires an issuer's worldwide or U.S. holders to be less than 300.\67\ An issuer that has proceeded under either of Rule 12h6's quantitative provisions obtains the Rule 12g32(b) exemption upon the termination of its registration and reporting under Rule 12h6.
\65\ Exchange Act Rule 12h6(a)(4) (17 CFR 240.12h6(a)(4)). Thus far, most issuers that have terminated their registration and reporting requirements under Rule 12h6 have relied on the trading volume standard.
\66\ Exchange Act Rule 12h6(a)(4)(i) (17 CFR 240.12h
6(a)(4)(i)). Rule 12h6(f)(6) (17 CFR 240.12h6(f)(6)) defines a recent 12month period to mean a 12calendarmonth period that ended no more than 60 days before the filing date of Form 15F.
\67\ Exchange Act Rule 12h6(a)(4)(ii) (17 CFR 240.12h

6(a)(4)(ii)).

Because a Rule 12h6 issuer will have met a more stringent trading volume test, although most likely for a different 12month period, we do not believe it is necessary to require that issuer to recalculate its relative U.S. trading volume for the previous 12 months upon the effectiveness of its deregistration under Rule 12h6 for the purpose of determining whether it may claim the Rule 12g32(b) exemption. Similarly, we believe that an issuer that has satisfied Rule 12h6's strict record holder standard should continue to be able to claim the Rule 12g32(b) exemption upon the termination of its registration and reporting under Rule 12h6 as long as it meets the proposed Rule 12g3 2(b) foreign listing requirement.

Comment Solicited

We solicit comment on the proposed Rule 12g32(b) quantitative provision.

Unless in connection with or following a recent Exchange Act deregistration, in order to claim the Rule 12g32(b) exemption, the proposed amendments would require an issuer to have published in English, on its Internet Web site or through an electronic information delivery system generally available to the public in its primary trading market, information that, from the first day of its most recently completed fiscal year, it:

The purpose of this nonU.S. publication condition is to provide U.S. investors with ready access to material information when trading in the issuer's equity securities in the overthecounter market.\72\ This condition also would assist U.S. investors who are interested in trading the issuer's securities in its primary securities market. Moreover, having a foreign private issuer's key nonU.S. disclosure documents electronically published in English would assist broker dealers in meeting their Rule 15c211 obligations to investors and facilitate resales of that issuer's securities to qualified institutional buyers under Rule 144A.
\72\ Any trading of a foreign private issuer's Rule 12g32(b) exempt securities in the United States would have to occur through an overthecounter market such as that maintained by the Pink Sheets, LLC since, as of April, 1998, the NASD has required a foreign private issuer to register a class of securities under Exchange Act Section 12 before its securities could be traded through the electronic overthecounter bulletin board administered by Nasdaq. See, for example, NASD Notice to Members (January 1998).

As under the current rule, the proposed amendments would require an issuer only to publish electronically information that is material to an investment decision regarding the subject securities, \73\ such as: \73\ Proposed Exchange Act Rule 12g32(b)(4)(ii). Athough the substantive requirements are the same, we have proposed conforming changes to General Instruction E and Part II, Item 9 of Form 15F to reflect the proposed renumbering of the nonU.S. publication requirements of Rule 12g32(b).

As is currently required of an issuer that has terminated its Exchange Act registration and reporting obligations under Rule 12h 6,\75\ the proposed rule amendments would require any issuer claiming the Rule 12g32(b) exemption to publish electronically, at a minimum, English translations of the following documents if in a foreign language:
\75\ Note 1 to Exchange Act Rule 12g32(e) (17 CFR 240.12g3 2(e)).

As proposed, an issuer that claimed the Rule 12g32(b) exemption, in connection with or following the recent effectiveness of its Exchange Act deregistration, would not have to comply with the electronic publication requirement for its last fiscal year.\78\ Since a recently deregistered company will already have filed its Exchange Act reports on EDGAR for its most recently completed fiscal year, such a prior year publication requirement is not necessary to protect investors.
\78\ Proposed Note 3 to proposed Exchange Act Rule 12(g)32(b). 2. Electronic Publishing Requirement To Maintain Exemption

In order to maintain the Rule 12g32(b) exemption, the proposed amendments would require an issuer to publish the same information specified in the prior fiscal year provision, on an ongoing basis and for subsequent fiscal years, on its Internet Web site or through an electronic information delivery system in its primary trading market.\79\ This requirement would apply to any issuer claiming the exemption, whether or not a former Exchange Act registrant. Like the prior fiscal year publication condition, this ongoing publication condition would help assure that investors and other market participants have access to an issuer's specified nonU.S. disclosure documents, in English, which are material to an investment decision. \79\ Proposed Exchange Act Rule 12g32(c)(1).

Similar to the current rule,\80\ the proposed rule amendments would require an issuer to publish electronically its nonU.S. disclosure documents promptly after the information has been made public, pursuant to its home jurisdiction laws, nonU.S. stock exchange rules, or shareholder rules and practices.\81\ As under current Commission staff practice, what constitutes ``promptly'' would depend on the type of document and the amount of time required to prepare an English translation. Currently an issuer typically must electronically publish or submit in paper a copy of a material press release on the same business day of its original publication.
\80\ Exchange Act Rule 12g32(b)(1)(iii).
\81\ Proposed Exchange Act Rule 12g32(c)(2). Form 6K imposes a similar requirement.

The proposed amendments would permit an issuer to meet Rule 12g3 2(b)'s electronic publication requirement concurrently with the publishing in English of a nonU.S. disclosure document through an electronic information delivery system generally available to the public in its primary trading market. Thus, if an issuer's nonU.S. stock exchange or securities regulatory authority permits the issuer to publish electronically a required report on its electronic delivery system, and the public has ready access to the report and other documents maintained on the system,\82\ that electronic publication solely would satisfy the proposed Rule 12g32(b)'s electronic publishing requirements.
\82\ An example of such a system is the System for Electronic Document Analysis and Retrieval (``SEDAR'') maintained by the Canadian Securities Administrators.

Comment Solicited

We solicit comment on the proposed condition requiring an issuer to publish electronically its nonU.S. disclosure documents.

FOR FURTHER INFORMATION CONTACT

Elliot Staffin, Special Counsel, at (202) 5513450, in the Office of International Corporate Finance, Division of Corporation Finance, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 205493628.