Registration Procedures

On December 13, 1994, the Commission adopted the following amendments to Form 20-F of the Exchange Act and Regulation S-X to streamline the financial information and reconciliation requirements for both foreign and domestic companies. The amendments generally cover both prospectus requirements and continuous reporting obligations.

Reporting Currency and Hyperinflation Accounting Amendments to accounting regulations included revisions allowing foreign issuers to state their primary financial statements in the currency reported to a majority of shareholders, rather than in the currency of either the issuer's country of incorporation or its primary economic environment. The amendments eliminated the reconciliation requirement for foreign private issuers accounting for their operations in hyperinflationary environments in accordance with International Accounting Standard No. 21, "The Effects of Changes in Foreign Exchange Rates." Securities Act Release No. 33-7117.

Business Combinations Amendments to Form 20-F eliminated the requirement that foreign issuers reconcile differences attributable to the determination of the method of accounting for business combinations or for amortization periods of goodwill or negative goodwill if the method used regarding these items conforms with International Accounting Standard No. 22, "Business Combinations." Securities Act Release No. 33-7119.

Equity Investees Amendments to Rule 3-09 of Regulation S-X modified the asset size test determining whether financial statements of an equity investee must be provided. The significance thresholds are measured solely in terms of the size of a company's investment in the investee and the investee's pre-tax income. Securities Act Release No. 33-7118.

Financial Schedules The Commission rescinded the requirement for financial schedules relating to short-term borrowings and supplementary income statement information. Securities Act Release No. 33-7118.

Pending Proposals

Solicitation of Interest Prior to an Initial Public Offering On June 27, 1995, the Commission proposed Rule 135d, to allow an issuer with no established market for its securities in the U.S. to "test the waters" for potential investor interest in the company before incurring the costs associated with the preparation of a Securities Act registration statement. The proposed rule provides that solicitations of interest, either written or broadcast, would not constitute an "offer" for purposes of the registration requirements of the Securities Act, provided they include certain specified information. Solicitations of interest would have to be submitted to the Commission on or before first use, and issuers who decide to proceed with a registered initial public offering would have to file a registration statement and provide investors with a prospectus. Securities Act Release No. 7188.

Elimination of Required Financial Statements for Pending Acquisitions On June 27, 1995, the Commission proposed to eliminate the requirement to provide audited financial statements for pending business acquisitions in Securities Act registration statements if such audited financial statements are filed within 75 days of consummation of the acquisition. The proposed rules would automatically waive the required financial statements for significant acquisitions completed within 75 days of a registered offering, if such audited financial statements are not readily available at the time the offer commences, and would automatically waive the earliest year of required audited financial statements if those financial statements are not readily available. Securities Act Release No. 7189.

Disclosures About Derivatives and Risk Management Activities On December 28, 1995, the Commission proposed rule amendments that would supplement disclosures currently required by generally accepted accounting principles and Commission rules and make information about derivative financial instruments, other financial instruments, and certain derivative commodity instruments more useful to readers assessing the market risk associated with these instruments. The proposed rules, which generally would apply to both prospectus requirements and continuous reporting obligations, clarify and expand existing requirements for financial statement footnote disclosures about the company's accounting policies for derivative financial instruments and derivative commodity instruments and require disclosure outside the financial statements of qualitative and quantitative information about market risk inherent in such instruments. Securities Act Release No. 7250. In a subsequent release on April 9, 1996, the Commission proposed a safe harbor for the new derivatives disclosure that constitutes forward looking information. The proposal would state that the safe harbor for forward looking information provided in Section 27A of the Securities Act and Section 21E of the Exchange Act would apply to quantitative information about market risk and information about market risk in future reporting periods. Securities Act Release No. 7280.

Electronic Delivery of Disclosure Documents

On October 6, 1996, the Commission issued an interpretive release providing guidance to issuers who use electronic media in complying with the delivery requirements of the federal securities laws. The release clarifies that information distributed over the internet or through other electronic means may be viewed as satisfying the delivery or transmission requirements if such distribution results in the delivery to the intended recipients of substantially equivalent information as those recipients would have had if the information were delivered to them in paper form. Securities Act Release No. 7233. On May 9, 1996, the Commission issued a second interpretive release addressing issues associated with the electronic delivery of information by broker-dealers, transfer agents and investment advisers under certain Exchange Act and Investment Adviser Act rules. Securities Act Release No. 7288. On May 9, 1996 the Commission also adopted several technical amendments to rules and forms that are intended to codify some of the interpretations set out in the May 9, 1996 interpretive release. The rule amendments reflect the fact that issuers amy comply with these rules, originally premised on paper delivery, so long as reasonable alternative means are employed. Securities Act Release No. 7289.

CONTINUING REPORTING OBLIGATIONS

Relief from Exchange Act Registration for Small Issuers On May 1, 1996, the Commission amended its rules to raise the total assets threshold for entry into and exit from the full disclosure system. Under the new rules, an issuer that has 500 or more equity security holders of record (including, for foreign issuers, more than 300 such security holders in the U.S.) and total assets of $10 million or more (rather than the previous $5 million threshold) must register its securities under Section 12(g) of the Exchange Act and comply with the periodic reporting requirements of that Act. Securities Exchange Act Release No. 37157.

RESTRICTIONS APPLYING TO PRIVATE PLACEMENTS

New Exemption for Certain California Limited Offers On May 1, 1996, the Commission adopted an exemption from the registration requirements for offers and sales of securities, in amounts up to $5 million, that satisfy the conditions of a 1994 exemption from California state qualification requirements. The California exemption provides that issuers may engage in written general solicitations of interest, with certain limitations on content, and that offers and sales may be made to "qualified purchasers" only. Purchasers would receive restricted securities. No filing with the Commission is required. The federal antifraud prohibitions continue to apply to offers and sales made pursuant to the new federal exemption. Securities Act Release No. 7285.

Pending Proposal to Shorten Holding Periods Under Rule 144 On June 27, 1995, the Commission proposed amendments to shorten the holding period requirements of Rule 144 under the Securities Act. The rule provides a safe harbor for resale of securities by persons who hold either "restricted" securities, or securities of a company of which they are affiliates. Under the current rule, limited sales of "restricted" securities may be made two years after the securities have been sold by the issuer or an affiliate, and the securities may be sold without limitation upon the expiration of three years from the issuer or affiliate sale. The proposed amendments to Rule 144 would shorten these holding periods to one year and two years, respectively. The amendments are intended to increase the usefulness of the safe harbor and reduce the cost of private capital formation. Securities Act Release No. 7187.

STABILIZATION AND OTHER CONTROLS ON DEALING

Activities by Issuers, Underwriters, and Others During a Distribution

Exemptions for multinational offerings. Rules 10b-6, 10b-7, and 10b-8 ("Anti-manipulation Rules") under the Exchange Act, which apply to securities distributions in the United States, are designed to prevent market manipulation. Rule 10b-6 prohibits persons participating in a distribution from bidding for or purchasing, or inducing other persons to bid for or purchase, securities that are the subject of a distribution (or any security of the same class or series or any right to purchase any such security) until their participation in the distribution is complete. Exceptions to the general prohibitions of Rule 10b-6 include stabilizing transactions permitted by Rule 10b-7 and transactions in rights permitted by Rule 10b-8.

The principal trading markets for foreign securities generally are outside the United States. Nonetheless, fraudulent and manipulative conduct undertaken in these markets could affect distributions in the United States. Since 1955, the Commission has held that, in distributions of foreign securities in the United States, the Anti-manipulation Rules apply to all distribution participants and their affiliated purchasers, wherever they are located or effect transactions. As multinational offerings have become more common, however, application of the Anti-manipulation Rules to overseas transactions often has conflicted with customs and market practices of other jurisdictions. The rules may impose compliance burdens and costs on foreign issuers, foreign underwriters, and their affiliates.

The Commission has eased these effects with exemptions for individual, and classes of, transactions. The exemptions balance the need to protect U.S. investors from the abuses that the Anti-manipulation Rules are intended to address, with the costs of applying those rules abroad. The exemptions accommodate foreign trading practices where the risk of manipulative effects in the United States from foreign activities is reduced, and the Commission has access to information about overseas transactions.

In October 1993, the Division of Market Regulation, pursuant to delegated authority, issued class exemptions from the Anti-manipulation Rules for distributions in the United States of actively-traded equity securities of certain highly capitalized German issuers. Letter regarding Distributions of Certain German Securities, Securities Exchange Act Release No. 33022 (October 6, 1993), 58 FR 53220 ("German Letter"). The German Letter permits distribution participants and their affiliated purchasers to effect transactions in Germany in the security being distributed ("Qualified German Security") and related securities, subject to certain conditions, including disclosure, recordkeeping, record production, and notice requirements. Generally, in order to qualify for the exemptions in the German Letter, the issuer must be a German company having outstanding a component security of the Deutscher Aktienindex ("DAX") (or be a subsidiary of such issuer), and the offered security must be: (i) a DAX component security; (ii) an equity security with an average daily trading volume ("ADTV") that equals or exceeds US$5 million in value; or (iii) a security that is convertible into, exchangeable for, or a right to acquire, a security of a German issuer described in (i) or (ii). These issuers also must have a market capitalization in excess of US$1 billion. The German Letter exemptions also require that certain disclosures be made in the offering materials regarding the activities that may be undertaken by the distribution participants during a distribution of Qualified German Securities, and that proprietary transactions be effected or reported through the facilities of the German stock or options exchanges. All proprietary and discretionary customer trades, as well as certain other customer trades, must be reported to an independent German entity, and such information must be made available to the Commission's Division of Market Regulation upon request. Moreover, all transactions in the United States must be effected in compliance with the Anti-manipulation Rules.

In November 1993, shortly after the issuance of the German Letter, the Commission published a Statement of Policy announcing the Commission's policy of providing class exemptions from the Anti-manipulation Rules to facilitate multinational distributions of actively-traded securities of highly capitalized issuers of other foreign jurisdictions. These exemptions were to be subject to substantially similar principles, terms, and conditions as those applied to the exemptions in the German Letter. Application of Rules 10b-6, 10b-7, and 10b-8 during Distributions of Certain Foreign Issuers, Securities Exchange Act Release No. 33137 (November 3, 1993), 58 FR 60324 ("November 1993 Policy Statement").

Consistent with the November 1993 Policy Statement, the Division of Market Regulation, pursuant to delegated authority, has issued additional class exemptions intended to ameliorate the conflicts between the requirements of the Anti-manipulation Rules and other regulatory requirements and practices in foreign jurisdictions. Class exemptions have been issued to facilitate distributions in the United States of the securities of certain highly capitalized French and Dutch issuers. Letter regarding Distributions of Certain French Securities, Securities Exchange Act Release No. 34176 (June 7, 1994), 59 FR 31274 ("French Letter"); Letter regarding Distributions of Certain Dutch Securities, Securities Exchange Act Release No. 36412 (October 19, 1995), 60 FR 55391 ("Dutch Letter"). The French Letter and the Dutch Letter permit distribution participants and their affiliated purchasers to effect transactions in France and the Netherlands, respectively, in the security being distributed ("Qualified Security") and related securities, subject to certain trading volume, disclosure, recordkeeping, record production, and notice requirements substantially similar to those set forth in the German Letter.

The Commission also has granted class exemptions from the Anti-manipulation Rules to facilitate distributions in the United States of the securities of certain highly capitalized United Kingdom issuers and of certain issuers whose securities are traded on SEAQ International. Letter regarding Distributions of Certain United Kingdom Securities and of Certain Securities Traded on SEAQ International, Securities Exchange Act Release No. 35234 (January 10, 1995), 60 FR 4644 ("U.K. Letter"). The U.K. Letter permits distribution participants and their affiliated purchasers to effect transactions in the United Kingdom in certain qualified U.K. securities ("Qualified U.K. Securities") or SEAQ International securities ("Qualified SEAQ International Securities"), and related securities, subject to certain conditions. The exemptions for both Qualified U.K. Securities and Qualified SEAQ International Securities are conditioned upon disclosure, recordkeeping, record production, and notice requirements, and, in the case of the exemption for Qualified U.K. Securities, also upon trading volume requirements, substantially similar to those set forth in the German, French, and Dutch Letters. The exemption for Qualified SEAQ International Securities is further conditioned, generally, upon the distributed security being a "Qualified German Security" or a "Qualified French Security," as defined in the German Letter and the French Letter, respectively, or any other security that qualifies for an exemption pursuant to the November 1993 Policy Statement, or a security that is of the same class and series as, or a right to purchase, a Qualified SEAQ International Security.

Cooling-off periods applicable to distributions of foreign securities. In April 1994, the Division of Market Regulation, pursuant to delegated authority, amended an exemption from Rule 10b-6 to clarify the application of the rule's cooling-off periods to distributions of foreign securities in the United States. A nine business day cooling-off period is available for a distribution of any security of a foreign issuer, subject to Commission notification, recordkeeping, and record production requirements. A two business day cooling-off period is available for securities and depositary shares evidencing those securities if the foreign ordinary or depositary shares meet the rule's US$5/400,000 share criteria (i.e., stock with a minimum share price of $5 and a public float of at least 400,000 shares). If either the ordinary or depositary shares qualify, the ordinary or depositary shares, wherever traded, also would qualify for the two business day cooling-off period. Where foreign ordinary or depositary shares trading in the United States do not satisfy the US$5/400,000 share criteria, transactions in foreign ordinary or depositary shares still may qualify for the two business day cooling-off period if, in addition to satisfying the requirements of the nine business day cooling-off period, the aggregate world-wide published ADTV in the offered security equals or exceeds the equivalent of US$250,000. Letter regarding Application of Cooling-Off Periods under Rule 10b-6 to Distributions of Foreign Securities, Securities Exchange Act Release No. 33862 (April 4, 1994), 59 FR 17125.

Exemption from Anti-manipulation Rules for Rule 144A Sales. On November 3, 1993, the Commission adopted exceptions from the Anti-manipulation Rules for distributions in the United States of securities of a foreign government or a foreign private issuer, as defined in Rule 3b-4 under the Exchange Act, eligible for resale pursuant to Rule 144A under the Securities Act, when such distributions are made solely to qualified institutional buyers ("QIBs"), in transactions exempt from Securities Act registration requirements under Section 4(2) of, or Rule 144A or Regulation D under, the Securities Act. Securities Exchange Act Release No. 33138 (November 3, 1993), 58 FR 60326 (adopting release).

In February 1994, the Commission granted an exemption from the Anti-manipulation Rules with respect to market activities by distribution participants and their affiliated purchasers during offerings of foreign securities eligible for resale pursuant to Rule 144A under the Securities Act that are made to non-U.S. persons within the meaning of Rule 902(o)(2) or Rule 902(o)(7) of Regulation S. Specifically, offers and sales may be made pursuant to Regulation S to: (1) discretionary or similar accounts (other than an estate or trust) held for the benefit or account of a non-U.S. person by a U.S. fiduciary, as described in Rule 902(o)(2) under the Securities Act; and (2) international organizations and their agencies, affiliates, or pension plans, as described in Rule 902(o)(7) under the Securities Act. Letter regarding Regulation S Transactions during Distributions of Foreign Securities to Qualified Institutional Buyers [1993-1994] Fed. Sec. L. Rep. (CCH) 76,851 (February 22, 1994) ("February 1994 Letter"). The Commission subsequently modified the February 1994 Letter by rescinding the condition requiring that offers and sales must be made in compliance with the broker-dealer registration provisions of Section 15 of, or consistent with an exemption pursuant to Rule 15a-6 under, the Exchange Act. The modification letter, however, reiterated the language of the February 1994 Letter, stating that a foreign broker-dealer that solicits transactions with discretionary or similar accounts of non-U.S. persons held by a U.S. resident fiduciary, including a U.S. registered investment adviser, but not including a U.S. registered broker or dealer or a bank acting in a broker or dealer capacity as permitted by U.S. law, must be registered with the Commission pursuant to Section 15 of the Exchange Act, or effect such transactions in accordance with subparagraph (a)(3) of Rule 15a-6. Letter regarding Regulation S Transactions during Distributions of Foreign Securities to Qualified Institutional Buyers (March 9, 1995).

Conditional exemption for certain subsidiaries of CS Holding. In March 1995, the Commission granted conditional exemptions from the Anti-manipulation Rules to certain subsidiaries ("Qualifying Subsidiaries") of CS Holding, a Switzerland-based company whose subsidiaries include a U.S. registered broker-dealer and a Swiss universal bank, to engage in certain transactions when other of CS Holding's subsidiaries are participating in a distribution of securities in the United States. The exemptions address the impact of the Anti-manipulation Rules on universal banks, which otherwise would be deemed to be "affiliated purchasers" and thereby subject to the rules' restrictions. Letter regarding CS Holding [1995] Fed. Sec. L. Rep. (CCH) 77,018 (March 31, 1995) ("CS Holding Letter").

The exemptions in the CS Holding Letter do not apply to an otherwise Qualifying Subsidiary that is engaged in a distribution as an issuer, underwriter, prospective underwriter, or selling group member. Moreover, the exemptions are subject to the following conditions: (i) each CS Holding subsidiary that is a U.S. broker-dealer ("non-Qualifying Subsidiaries") must establish, maintain, enforce, and audit written policies and procedures to separate its activities in connection with distributions of securities from the securities and derivatives trading operations of Qualifying Subsidiaries; (ii) any breach of the required information barriers followed by immediate trading by a Qualifying Subsidiary prior to the completion of the relevant distribution must be reported immediately to the Division of Market Regulation; (iii) Qualifying Subsidiaries must retain certain records for at least two years and must supply those records to the Division of Market Regulation upon request; and (iv) each non-Qualifying Subsidiary must conduct an independent review of its compliance during the calendar year with the conditions of the CS Holding Letter or, if applicable, file a statement with the Division of Market Regulation representing that it did not participate in any distributions during the calendar year.

Proposed Regulation M. On April 11, 1996, the Commission published a release proposing a substantial restructuring of the Anti-manipulation Rules, as well as Rules 10b-6A and 10b-21 under the Exchange Act. Securities Exchange Act Release No. 37094 (April 11, 1996), 61 FR 17108 ("Release"). The Release follows the Commission's April 19, 1994 publication of a concept release soliciting comment on potential revisions to the Anti-manipulation Rules. Securities Exchange Act Release No. 33924 (April 19, 1994), 59 FR 21681.

Proposed Regulation M is intended to accomplish several objectives, including the simplification of the offering process and the elimination of unnecessary costs and burdens imposed on offering participants under the Anti-manipulation Rules. Proposed Regulation M would achieve these goals by reorganizing the structure of the rules, reducing their complexity, and eliminating or relaxing existing restrictions in those circumstances where either the risk of manipulation appears small, or the costs of the restrictions are disproportionate to the purposes that they serve. Many of the proposed amendments would codify the previously described exemptive and interpretive positions under the Anti-manipulation Rules. The Commission also believes that separate regulation of rights offerings, currently governed by Rule 10b-8 under the Exchange Act, may no longer be warranted. Accordingly, the Release proposes the rescission of Rule 10b-8, and proposed Regulation M would deregulate rights offerings.

The proposed regulation is comprised of six rules: 100 through 105. Proposed Rule 100 would contain definitions applicable to all of the rules under Regulation M. The activities currently regulated by Rule 10b-6 would be regulated by proposed Rules 101 and 102:

Rule 101: Activities by distribution participants. Rule 101 would prohibit distribution participants (underwriters, prospective underwriters, and participating brokers and dealers) and their affiliated purchasers from bidding for, purchasing, or attempting to induce any person to bids for or purchase, a covered security (i.e., the security that is the subject of the distribution, and any security whose price is, or may in the future be, used to determine, in whole or in significant part, the value of such security) during the applicable restricted period. Securities proposed to be excepted from the rule include actively-traded securities, i.e., securities with an ADTV value of $1 million or more, and investment grade nonconvertible securities. For securities not excepted from the rule, the restricted periods would be keyed off of the pricing of the security. Securities with an ADTV value of at least $100,000, but less than $1 million would have a restricted period of one business day. The restricted period for securities with an ADTV value of less than $100,000 would be five business days.

Among the activities proposed to be excepted from Rule 101 are: (1) the dissemination of research reports that satisfy Securities Act Rules 138 and 139; (2) stabilizing transactions complying with Rule 104; (3) odd-lot transactions; (4) exercises of securities, including all exercises of standardized call options; (5) unsolicited brokerage transactions; (6) certain purchases made in connection with bona fide basket transactions; (7) inadvertent, de minimis violations involving a bid that is not accepted or purchases aggregating less than 1% of the security's ADTV, if the firm has established procedures to achieve compliance with the rule; (8) certain transaction in Rule 144A eligible securities; and (9) certain transactions in connection with the distribution.

Rule 102: Activities by issuers and selling securityholders during a distribution. Rule 102 would prohibit issuers, selling securityholders, and their affiliated purchasers from bidding for, purchasing, or attempting to induce any person to bid for or purchase, any covered security, during the applicable restricted period. Many of the proposed provisions of Rule 102 are the same as those proposed for Rule 101. A key difference, however, is the absence of an exception for actively-traded securities. Moreover, the excepted activities under proposed Rule 102 would be limited to: (1) odd-lot transactions; (2) transactions complying with Rule 23c-3 under the Investment Company Act of 1940; (3) exercises of securities, including all exercises of standardized call options; and (4) offers to sell or the solicitation of offers to buy the securities being distributed. Generally, the other rules proposed under Regulation M are:

Rule 103: Nasdaq passive market making. Proposed Rule 103 would replace Rule 10b-6A, and would permit passive market making on Nasdaq in any Nasdaq-quoted security.

Rule 104 and companion rules: Stabilization and other activities in connection with an offering. Rule 104 would replace Rule 10b-7 and would regulate the prices at which underwriters are permitted to stabilize the price of a security to facilitate an offering. An exception for stabilizing during Rule 144A distributions by foreign and domestic issuers was proposed. As proposed, Rule 104 also would, among other things: (1) allow stabilizing bids to reference the price in a security's principal market, and would permit stabilizing bids to follow the independent market upward and downward, capped by the offering price; (2) permit stabilizing bids to be adjusted to reflect exchange rate fluctuations; and (3) eliminate distinctions between exchange-traded and over-the-counter securities.

Although Rule 104's price restrictions would not extend to after-market activities, Rule 104 and certain related provisions proposed to require more specific disclosure of stabilization, syndicate covering transactions, and penalty bid activities. In addition, prior notice of a syndicate covering transaction or penalty bid to the self-regulatory organization with direct authority over the market on which such transaction is effected or such bid is placed or transmitted was proposed.

Rule 105: Short selling in connection with a public offering. As proposed, Rule 105 would prevent manipulative short sales in anticipation of a public offering by prohibiting the covering of such short sales with securities obtained from an underwriter, broker, or dealer who is participating in the offering. The period during which such short sales would be prohibited would be shortened from that provided in Rule 10b-21 to cover only the period commencing five business days prior to the pricing of an offering and ending with such pricing.

OTHER ISSUES BEARING ON INTERNATIONAL EQUITY OFFERS

Safe Harbor for Forward-Looking Statements On December 22, 1995, the Private Securities Litigation Reform Act was enacted by the U.S. Congress. The Act provides over two dozen separate changes to the federal securities laws, including the addition of a statutory safe harbor for forward-looking statements. The purpose of the safe harbor is to encourage projections and other forward-looking statements by providing protection from liability for such statements. The safe harbor applies to both prospectuses and continuous reporting documents. It is not available for initial public offerings.

Pending Proposal Regarding Reporting of Beneficial Ownership On July 3, 1996, the Commission proposed amendments to the rules for reporting beneficial ownership in public companies under Section 13(d) of the Exchange Act. The proposals would make the shorter form Schedule 13G available, in lieu of the long form Schedule 13D, to all investors who beneficially own less than 20% of the outstanding class of securities that do not acquire or hold the securities for the purpose of, and do not have the effect of, changing or influencing the control of the issuer of the securities. Securities Exchange Act Release No. 37403.