Moreover, investors will still receive the protections of the antifraud provisions of the federal securities laws. In particular, we believe that U.S. investors will benefit by the exemptions because they will facilitate the inclusion of U.S. investors in cross-border tender and exchange offers, business combinations and rights offerings. A Final Regulatory Flexibility Analysis ("FRFA") has been prepared in accordance with. You must furnish five copies of this Form and any amendment to the Form (see Part I, Item 1. Instructions to paragraph (h)(8) and (i) of this section: 1. The Sarbanes-Oxley Act and Foreign Private Issuers - Gibson [Note: Form CB does not appear in the Code of Federal Regulations. No specific data was provided in response to the Commission's request in the proposing release regarding the costs and benefits associated with today's amendments. Like the revised foreign private issuer definition, the starting point is Rule 12g3-2(a) under the Exchange Act.72 Rule 12g3-2(a) follows the definition of "securities held of record" in Rule 12g5-1, but requires the offeror to "look through" the record ownership of brokers, dealers, banks or nominees appearing on the issuers' books or those of transfer agents, depositaries, or others acting on the issuer's behalf. Commenters agreed with this evaluation. If the request relates to a third party tender offer, the request should be directed to the Office of Mergers and Acquisitions. By listing securities on a national securities exchange (usually the NYSE or Nasdaq). The authority citation for Part 230 continues to read in part as follows: Authority: 15 U.S.C. v. Count securities as beneficially owned by residents of the United States as reported on reports of beneficial ownership that are provided to you or publicly filed and based on information otherwise provided to you. However, both securities exchanges offer special treatment that can exempt foreign private issuers from the requirements of the 20% rules. 22 Financial statements submitted under cover of new Form CB that comply with the accounting requirements of the filer's home jurisdiction need not be reconciled to U.S. generally accepted accounting principles, regardless of whether the Form CB is submitted in connection with a Tier I exempt offer or under new Rules 801 or 802. 70 Exchange Act Rule 3b-4 [17 CFR 240.3b-4]. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Foreign public and private issuers enjoy the benefits of significant exemptions and exclusions from The Commission also finds, in accordance with Section 553(d) of the Administrative Procedure Act,105 that the delegation of exemptive authority in this release relates to agency organization, procedure, or practice. This CLE course will analyze the criteria for qualifying as a foreign private issuer (FPI) for purposes of securities registration, and review best practices for documenting and obtaining FPI status and reduced reporting requirements afforded FPIs. SEC.gov | Financial Reporting Manual The Rule requires the issuer to provide the Commission with information that it has: (1) made or is required to make public pursuant to the law of the country of its domicile or in which it is incorporated or organized; (2) filed or is required to file with a stock exchange on which its securities are traded and that was made public by such exchange; and/or (3) distributed or is required to distribute to its securities holders. Qualifying foreign private issuers can use the Rule 12g3-2(b) exemption in establishing an unlisted American Depositary Receipts (ADR) program. The subject company, however, must be a foreign private issuer. In spite of these benefits, some foreign private issuers voluntarily become subject to all, or selectively adopt some, general SEC and NYSE/Nasdaq requirements due to potential market or investor preferences. This Form is used to report sales of securities in connection with a rights offering in reliance upon 230.801 of this chapter and to report sales of securities in connection with an exchange offer or business combination in reliance upon 230.802 of this chapter. 75 The revisions from the proposal do not affect the treatment of bearer securities in determining U.S. ownership. Securities acquired in a 230.801 or 230.802 transaction may be resold in the United States only if they are registered under the Act or an exemption from registration is available. (g) Rights offering. (C) Cash only consideration. 77s, 78d-1, 78d-2, 78w, 78ll(d), 78mm, 79t, 77sss, 80a-37. We believe Form CB and Form F-X are significantly less burdensome to prepare than a Schedule TO or a registration statement. We estimate that it will impose an estimated burden of 2 hours for a total burden of 1648 hours. Exchange Act Rule 14d-4(b) [17 CFR 240.14d-4(b)]. Typed signatures are acceptable so long as manually signed copies are retained by the filing person for five years. This collection of information has been assigned OMB Control Nos. SCOTUS, in Mallory v. Norfolk Southern Railway Co.,vacated and remanded the Pennsylvania Supreme Court's decision. By amending 240.14d-9 by revising the introductory text of paragraph (d)(2) and adding paragraph (d)(2)(iii) to read as follows: 240.14d-9 Recommendation or solicitation by the subject company and others. A bidder may make one offer to U.S. holders and another only to non-U.S. holders if the offer to U.S. holders is made on terms at least as favorable as those offered any other holder of the same class of securities that is the subject of the tender offers. One commenter suggested excluding the securities of the bidder, regardless of the amount. List of Foreign Issuers Which Have Submitted Information Under the Exemption Relating to Certain Foreign Securities. 38456 (March 31, 1997). Home jurisdiction means both the jurisdiction of the subject company's incorporation, organization or chartering and the principal foreign market where the subject company's securities are listed or quoted. (We discuss Schedules 13D and 13G in Chapter 6. (i) The bidder must disseminate any informational document to U.S. holders, including any amendments thereto, in English, on a comparable basis to that provided to security holders in the home jurisdiction. (2) Equal treatment. Use the method of calculating record ownership in 240.12g3-2(a), except that your inquiry as to the amount of securities represented by accounts of customers resident in the United States may be limited to brokers, dealers, banks and other nominees located in the United States, your jurisdiction of incorporation, and the jurisdiction that is the primary trading market for the subject securities, if different than your jurisdiction of incorporation; iv. If the issuer or affiliate offers securities registered under the Securities Act of 1933 (15 U.S.C. Schwert, "Markup Pricing in Mergers and Acquisitions," Journal of Financial Economics, 41 (1996). If, after calculating the percentage of the issuer's securities held by U.S. holders, the friendly party commences an exchange offer or business combination in reliance on the Section 802 exemption, then a subsequent offeror also may rely on the Section 802 exemption so long as all of the conditions of such exemption, other than the ownership limitation condition, are satisfied. Rule 12g3-2(b) under the US Securities Exchange Act of 1934, as amended exempts a foreign private issuer from having to register a class of equity securities under section 12(g) of the Exchange Act. 48 This exception is based on a limited class exemption under Rule 10b-13 to permit "connected exempt market makers" and "connected exempt principal traders" to continue their U.K. market making activities during a cross-border offer that is subject to the City Code. Any issuer tender offer (including any exchange offer) where the issuer is a foreign private issuer as defined in 240.3b-4 if the following conditions are satisfied. 9 15 U.S.C. 7. This form is used to report an issuer tender offer conducted in compliance with. It appears that issuers will not rely on the presumption and will feel the need to query ADR depositaries regarding the owners of ADRs. 0 In some cases, the staff allows dual calculations of tangible book value. (2) Limitation on U.S. ownership. By amending 240.13e-3 to add paragraph (g)(6) to read as follows: 240.13e-3 Going private transactions by certain issuers or their affiliates. These provisions include, among others, the following: (1) keeping the offer open 20 business days; (2) filing a Schedule TO; (3) disseminating the offering documents; and (4) offering withdrawal rights. 47 Under the City Code, connected exempt market makers and connected exempt principal traders are market makers or principal traders that are affiliated with the bidder's advisors (Eligible Traders). b. With respect to rights offerings, the likely respondents will be foreign private issuers conducting rights offerings. 68 As explained in the proposing release, both foreign and domestic issuers that are excepted from the definition of "investment company" under the Investment Company Act would be permitted to use these exemptions, so long as reliance on the exemptions is consistent with their unregistered status under the Investment Company Act. The commenters concurred that imposition of additional criteria would only diminish the effectiveness of the exemption by narrowing its scope and causing U.S. security holders to continue to be excluded. (5) Eligibility of securities. The Commission considered requiring that offerors deliver rights offering materials to U.S. investors, even if those materials were only published overseas, as proposed. (a) Business combination. As adopted, U.S. holders may be offered only cash, but the bidder must have a reasonable basis to believe that the cash is substantially equivalent to the value of the securities and any cash or other consideration offered to non-U.S. holders.26. U.S. security holders hold 10 percent or less of the class of securities sought in the tender offer; In the case of an offer that otherwise would be subject to Rule 13e-4 or Regulation 14D under the Exchange Act, bidders submit, rather than file, an English language translation of the offering materials to the Commission under cover of Form CB and, in the case of a foreign offeror, file a consent to service on Form F-X; U.S. security holders participate in the offer on terms at least as favorable as those offered to any other holders; and. 56 See General Note 8 to new Rules 800-802. To the extent material, a statement disclosing the additional purposes, if any, for which management uses the non-GAAP measure. 631 0 obj <<4e1bfe813c9e083fb00f44c314ea9b05>]>>stream See Section II.F.1. Section 23(a) of the Exchange Act 101 requires us, in adopting rules under the Exchange Act, to consider the impact any rule would have on competition. As proposed, the Tier I and Tier II tender offer exemptions also would not have been available if the subject company was an investment company registered or required to be registered under the Investment Company Act. See Regulation of Takeovers and Security Holder Communications, Securities Act Release No. SEC.gov 77a et seq. See Exemption under Rule 10b-13 for Certain Principal Trading and Market Making Activities dated June 29, 1998 (Eligible Trader Class Exemption). The following legend or an equivalent statement in clear, plain language, to the extent applicable, appears on the cover page or other prominent portion of any informational document the issuer disseminates to U.S. holders: This rights offering is made for the securities of a foreign company. One way in which the offeror could take special care to prevent sales to U.S. holders would be, in responding to inquiries and processing letters of transmittal, to obtain adequate information to determine whether the holder is a person in the United States or a U.S. person. For these reasons, we are persuaded by the commenters that large U.S. holders likewise should be excluded from the calculation of U.S. ownership. Investors in issuer exchange offers not involving an additional cash investment will be able to "tack" the holding period for the tendered restricted security to the holding period for the new security, and thus would calculate the holding period from the time it originally acquired the tendered security from the issuer or an affiliate. The exemptions provided by 230.801 and 230.802 are not available for any securities transaction or series of transactions that technically complies with 230.801 and 230.802 but are part of a plan or scheme to evade the registration provisions of the Act. 3. Bidders provide U.S. security holders with the tender offer circular or other offering documents, in English, on a comparable basis to that provided to other security holders. (6) Any tender offer or business combination made in compliance with 230.802 of this chapter, 240.13e-4(h)(8) or 240.14d-1(c). 90 Statement of the Commission Regarding Use of Internet Web Sites to Offer Securities, Securities Act Release No. 78mm(a)). 20 See Instruction 4 to paragraphs (h)(8) and (i) to revised Rule 13e-4 and Instruction 5 to paragraphs (c) and (d) of revised Rule 14d-1. We stated that a domestic company could not use a web site to disseminate the offering materials, unless access to that site was limited to non-U.S. persons. This additional requirement ensures that security holders will know how to obtain the information that this exception requires to be disclosed. [Release No. ), the loan notes need not be offered to U.S. holders. Excluding this period, the premium remains over 10%. eCFR Exchange Act Release No. Except as otherwise provided in Instruction 3 below, to determine the percentage of outstanding securities held by U.S. holders: i. The bidder knows or has reason to know that the level of U.S. ownership exceeds 10 percent (40 percent in the case of 14d-1(d)) of such securities. See the letter from Emmet, Marvin & Martin, LLP dated February 17, 1999, supra note 15. The company may self-certify and does not need to request exception from the SEC in this instance. But both foreign and domestic bidders, whatever their size, are eligible to use these exemptions. See note 99, infra, for information regarding the estimated burden associated with Form CB as compared to the current reporting requirements. 4. (i) Equal treatment - loan notes. A reconciliation of the differences between the non-GAAP measure disclosed or released with the most directly comparable GAAP measure. In addition, the NYSE and Nasdaq require certain notifications, certifications and affirmations relating to compliance with corporate governance rules. The Tier II exemption provides relief from the U.S. tender offer rules that are common impediments to extending offers to U.S. security holders. Web FPIs are exempt from Section 16 insider trading rules and the proxy rules Confidential review is permitted for initial SEC registration (as with Emerging Growth Companies Rule 801, as adopted today, is available only for rights offerings of equity securities made on a pro rata basis to existing security holders of the same class, including holders of ADRs evidencing those securities. Neither the Tier I nor the Tier II tender offer exemption is available for any transaction or series of transactions that technically complies with the exemption but is part of a plan or scheme to evade the tender offer provisions of the Exchange Act.20 For example, if an initial offer is commenced solely as a pretext for making a subsequent offer automatically eligible for the exemption, the Tier I exemption would not be available. Absent the exemption, an FPI with 300 or more US shareholders might be required to register with the US Securities and Exchange Commission. The offer is subject to disclosure requirements of a foreign country that are different from those of the United States. The transfer restrictions that we adopt today provide that to the extent the securities that are the subject of an exchange offer, business combination or rights offering are "restricted securities" under Rule 144 in the hands of the U.S. investor, then securities acquired by that investor in the transaction will be "restricted securities." 40 Revised Rules 13e-4(i)( 2)(iv) and 14d-1(d)(2)(iv) (Payment made in accordance with the requirements of the home jurisdiction law or practice will satisfy the prompt payment requirements of Rule 14e-1(c)). Offerors offering a cash-only alternative to U.S. security holders, however, must obtain an opinion from an independent third party stating that the cash being offered to U.S. security holders is substantially equivalent to the value of the securities being offered to foreign security holders, unless the offeror's securities are "margin securities" within the meaning of Regulation T. In the latter case, the offeror need only provide information on recent trading prices of the offeror's securities in lieu of an opinion. Even if the above presumption is not available, the bidder may nevertheless rely on the exemption if it can demonstrate that U.S. ownership is in fact less than the relevant threshold or, in the case of competing bids, if the bidder chooses to rely on the same exemption (Tier I, Tier II, or Rule 802) as that used by a prior offeror.86, There is no limitation under the exemptive provisions adopted today on the use of the Internet to publish offering materials and other information about the cross-border transaction.87 However, when materials are required to be disseminated directly to U.S. holders (for example, in a Tier II offer subject to Regulation 14D or when materials are mailed in the home country in a Tier I offer), Internet dissemination of the offering materials would not, without more, constitute adequate dissemination under the new exemptive rules.88 If an offeror publishes in its home country, posting the materials on its web site would not constitute adequate publication in the United States. Note to Item 2. A web site that is accessible in the United States cannot be used to entice U.S. investors to participate in the offering offshore. In accordance with the foregoing, we are amending Title 17, Chapter II of the Code of, PART 200 -ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATIONAND REQUESTS. The commenter was concerned that takeover situations are often fluid and that hostile offers often turn friendly shortly after commencement of the tender offer. Foreign Private Issuers Form CB is merely a cover sheet that incorporates the offering documents sent to security holders pursuant to the requirements of the country in which the issuer is incorporated. Any member of the public may direct to the Commission any comments concerning the accuracy of this burden estimate and any suggestions for reducing this burden. Include securities underlying American Depositary Shares convertible or exchangeable into the securities that are the subject of the tender offer when calculating the number of subject securities outstanding, as well as the number held by U.S. holders. Similarly, if the offeror registers securities under the Securities Act, the offeror may exclude subject company security holders residing in any state that refuses to register or qualify the offer and sale of securities in that state after a good faith effort by the offeror. The exemptions balance the need to provide U.S. security holders with the protections of the U.S. securities laws against the need to promote the inclusion of U.S. security holders in these types of cross-border transactions. 34 Schedules 13E-4 and 14D-1, the schedules previously used for issuer and third-party tender offers, respectively, have been combined into new Schedule TO in the Regulation M-A Release, supra note 6. This limited class exemption recognized the information barrier and other requirements contained in the City Code that Eligible Traders must satisfy to be exempt from the City Code's "acting in concert" provisions. Form CB is a cover sheet that incorporates the offering documents sent to security holders pursuant to the requirements of the country in which the issuer is incorporated. See Section II.F.3. In the first of the five new C&DI, the SEC confirms that under certain circumstances the subsidiary of a foreign private issuer may use an F-series registration statement to register securities that are guaranteed by the parent company, even if the subsidiary itself does not qualify as a foreign private issuer. The commenters agreed. In the past, some jurisdictions have permitted exclusion of U.S. holders despite domestic requirements to treat all holders equally on the basis that it would be impracticable to require the bidder to include U.S. holders. An issuer can and must examine its own records and those of transfer agents and depositaries acting on its behalf to obtain the necessary information regarding U.S. ownership of its own securities. Rule 12g3-2(b) Exemption. Foreign Private Issuers SEC.gov 18. The issuer is a foreign private issuer on the date the securities are first offered to U.S. holders. This contrasts with Schedule TO which has an estimated burden of 586 hours per form, and Forms S-1, S-2, S-3, S-4, F-1, F-2, F-3 and F-4 which have an estimated burden of 1,239, 470, 397, 1,233, 1,868, 1,397, 166, and 1,308 hours per form, respectively. We believe these effects are justified in order to benefit U.S. shareholders in foreign companies. However, we believe that the rules will result in a substantial savings to entities (both small and large) that qualify for the exemptions. Likewise, securities acquired in an exchange offer or business combination subject to 230.802 are "restricted securities" within the meaning of 230.144(a)(3) to the same extent and proportion that the securities tendered or exchanged by the security holder in that transaction were restricted securities. Securities Law for Foreign Companies The issuer need not, however, extend the rights offering to security holders in those states or jurisdictions that require registration or qualification. 6. You may not be able to sue the foreign company or its officers or directors in a foreign court for violations of the U.S. securities laws. The exception requires that: the tender offer is an excepted Tier I offer;44 the offering documents furnished to U.S. holders prominently disclose the possibility of any purchases, or arrangements to purchase, or the intent to make such purchases; the offering documents disclose the manner in which any information about any such purchases or arrangements to purchase will be disclosed; the offeror discloses information in the United States about any such purchases or arrangements to purchase in a manner comparable to the disclosure made in the home jurisdiction, as defined in 240.13e-4(i)(3); and the purchases comply with the applicable tender offer laws and regulations of the home jurisdiction. 14d-1(d)) of such outstanding securities, unless: i. The informational requirements are designed to give investors access to certain information so they have the opportunity to inform themselves about the issuer. If information on U.S. ownership can be obtained, that information should determine whether the exemptions are available, rather than a presumption based on trading activity. The premium is measured from four weeks prior to the first bid. Exempting foreign tender, exchange and rights offers from certain federal securities laws may have a competitive effect on U.S. issuers, who remain subject to all federal securities laws. We are adopting, as proposed, 10 percent as the maximum level of ownership by U.S. security holders that a subject company can have and be eligible for the Tier I exemption.18 Under the proposals, we solicited comment on whether to increase the 10 percent limitation for U.S. ownership to 15 or 20 percent. 1 Twitter 2 Facebook 3RSS 4YouTube Despite the use of disclaimers and the implementation of precautionary measures against accepting tenders or the exercise of rights from the United States, a web site posting could be viewed as an offer in the United States if the content of the web page clearly is designed to induce U.S. investors to find an indirect means to participate in the offer through offshore nominees or other means. (h) U.S. holder. We will use the information for the primary purposes of assuring that the offeror is entitled to use the Form and that investors have information about the transaction to enable them to make informed investment decisions. Cross-Border Tender and Exchange Offers, Business Combinations and Rights Offerings. WebRule 12g3-2 (b) 3 provides an exemption from registration under Section 12 (g) of the Act with respect to a foreign private issuer that submits to the Commission, on a current basis, the material required by the Rule. However, the NYSE and Nasdaq require the foreign private issuer to disclose the significant differences in its corporate governance practices from those practices required of U.S. companies under the exchanges corporate governance rules. 58 Under Rule 144(e)(1) [17 CFR 230.144(e)(1)], affiliates of the issuer are subject to volume restrictions on the resale of their securities. (iii) If the offeror disseminates by publication in its home jurisdiction, the offeror must publish the information in the United States in a manner reasonably calculated to inform U.S. holders of the offer. Benefits of Being a Foreign Private Issuer: The Notable Nine. The application of these provisions, however, may be different in the context of foreign disclosure requirements and practices. supra for a description of the Form CB. The issuer of the securities that are the subject of the tender offer is not an investment company registered or required to be registered under the Investment Company Act of 1940 (15 U.S.C. We expect the exemptions to reduce the costs and burdens of extending these types of offers to U.S. security holders. If the premium is measured from the price one day before the bid, the average premium drops to 38%. The Commission considers the information that is required to be disclosed by a form or schedule generally to be important in investment decisions. Foreign Private The revisions to Form F-X add non-U.S. entities submitting a Form CB to the list of entities currently required to file Form F-X. operating measures or other measures that are not non-GAAP measures (such as dollar revenues per square foot for hotels, same store sales, and revenues per slot machine for casinos, assuming that sales/revenues for each measure is based on GAAP numbers).