Overview

On September 23, 2008 the US Securities and Exchange Commission (the “SEC”) adopted amendments1 to certain rules and forms applicable to foreign private issuers2 that are intended to enhance disclosure provided to investors in the US public markets. The amendments accelerate the filing deadline for annual reports on Form 20-F and eliminate certain other public reporting accommodations currently applicable to foreign private issuers that the SEC believes are no longer necessary in light of global market developments and available technology. These amendments have been referred to as the “Foreign Issuer Reporting Enhancements” or “FIRE”.

The amendments also make it easier for companies to assess their foreign private issuer status by requiring a determination only once a year, as opposed to continuous monitoring, as is currently the case. In addition, the amendments make conforming changes to the “going private” rules to reflect recent amendments to the rules relating to foreign private issuer deregistration under the US Securities Exchange Act of 1934 (the “Exchange Act”).

The amendments become effective on December 6, 2008 although, as outlined below, foreign private issuers will not be required to comply with the FIRE amendments until later dates.

Annual Determination of Foreign Private Issuer Status

Currently, companies must monitor their foreign private issuer status on a continuous basis. If that status is lost, they immediately lose the ability to rely on accommodations applicable to foreign private issuers and become subject to obligations applicable to US reporting companies.3 The amendments permit companies to assess their foreign private issuer status only once a year, on the last business day of their second fiscal quarter. In addition, the amendments do not require companies that lose their foreign private issuer status to begin complying with obligations of US reporting companies until the first day of their next fiscal year (although, this would include filing an annual report on Form 10-K for the fiscal year in which the determination was made). This effectively affords companies who lose their foreign private issuer status with a period of six months to prepare to meet the obligations of US reporting companies. By contrast, a company that determines that it qualifies as a foreign private issuer will be able to avail itself of the related accommodations immediately upon the determination date.4

Foreign Issuer Reporting Enhancements

The amendments will accelerate the filing deadline for annual reports on Form 20-F and enhance certain disclosures required of foreign private issuers in annual reports and registration statements under the US Securities Act of 1933 (the “Securities Act”) and the Exchange Act.5 Key aspects of these changes are briefly discussed below.

Accelerated Filing Deadline for Annual Reports

Currently, foreign private issuers are required to file their annual reports on Form 20-F within six months of their fiscal year-end. The amendments will accelerate the filing deadline to four months after a foreign private issuer’s fiscal year-end, beginning with fiscal years ending on or after December 15, 2011.

The amendments did not adopt a proposed three-month filing deadline for larger foreign private issuers.

Segment data in financial statements

Currently, foreign private issuers who present financial statements in annual reports and registration statements otherwise fully in accordance with US GAAP may omit segment data required by US GAAP.6 Such foreign private issuers may also provide a qualified audit opinion as a result of this omission of segment data. The amendments will eliminate these accommodations beginning with fiscal years ending on or after December 15, 2009.

Reconciliation Of Financial Statements to US GAAP

Foreign private issuers who do not present financial statements in annual reports and registration statements in accordance with US GAAP or IFRS are required to provide reconciliations to US GAAP. Currently, foreign private issuers are permitted to provide a limited reconciliation in accordance with Item 17 of Form 20-F in annual reports and Exchange Act registration statements that do not relate to public offerings of securities. Foreign private issuers are also currently permitted to provide this limited reconciliation in Securities Act registration statements that relate to certain non-capital raising public offerings of securities. The amendments will eliminate these accommodations and require foreign private issuers to provide complete US GAAP reconciliations in accordance with Item 18 of Form 20-F,7 beginning with fiscal years ending on or after December 15, 2011.

The amendments will not eliminate the ability to provide limited Item 17 US GAAP reconciliations for any third party financial statements that are required in foreign private issuers’ annual reports or registration statements (e.g., financial statements of an equity method investee or a significant acquired business).8

Changes In and Disagreements With Certifying Accountants

Currently, foreign private issuers are not required to disclose information concerning changes in and disagreements with their certifying accountants in annual reports or registration statements. Consequently, unlike US reporting companies, foreign private issuers are not currently required under SEC rules to publicly disclose whether a previously engaged certifying accountant resigned, declined to stand for re-election or was dismissed. And unlike US reporting companies, foreign private issuers are not currently required under SEC rules to publicly disclose disagreements or reportable events that occurred during the two fiscal years and interim period preceding a change in a certifying accountant, or if any types of transactions that caused prior disagreements were subsequently accounted for or disclosed in a manner different from that which the previously engaged certifying accountant would have concluded or required. The amendments will eliminate these accommodations and require disclosure in foreign private issuers’ annual reports and registration statements regarding changes in and disagreements with certifying accounts that is substantially identical to the public disclosure required of US reporting companies,9 beginning with fiscal years ending on or after December 15, 2009.

Furthermore, as is the case with US reporting companies, foreign private issuers will be required to provide previously engaged certifying accountants with copies of the aforementioned disclosure and to file as an exhibit to the related SEC filing a letter from the previously engaged certifying accountant stating whether it agrees with the disclosure and, if not, the respects in which it does not agree.

ADR Fees and Payments

Currently, foreign private issuers with sponsored American Depository Receipt (“ADR”) facilities are required to disclose fees and charges payable by ADR holders in registration statements initially filed in connection with the ADRs. The amendments require foreign private issuers to also disclose in registration statements any payments they have received from depositaries in connection with their sponsored ADR programs. In addition, the ammendments will require foreign private issuers to disclose all such ADR related fees, charges and payments in their annual reports on Form 20-F, beginning with fiscal years ending on or after December 15, 2009.

Differences in Corporate Governance Practices

US securities exchanges typically exempt foreign private issuers from many of the exchanges’ corporate governance requirements. These exchanges generally require foreign private issuers to disclose, either on their websites or in their annual reports, the significant ways in which their corporate governance practices differ from the practices required of US reporting companies listed on the same exchange. The amendments will require foreign private issuers with securities listed on a US securities exchange to provide substantially similar disclosure in their annual reports on Form 20-F, beginning with fiscal years ending on or after December 15, 2008.

Harmonization of Exchange Act Deregistration and Going Private Rules

Currently, issuers engaging in the types of transactions specified in Exchange Act Rule 13e-3 (e.g., tender offers, reverse stock splits or asset sales) that have either a reasonable likelihood or a purpose of causing their equity securities to be delisted or held by fewer than 300 persons must publicly disclose their plan for “going private” by filing a Schedule 13e-3 with the SEC. This disclosure requirement was intended to apply when one of the specified types of transactions could be expected to result in the termination of an issuer’s Exchange Act registration and reporting obligations. Recently, the SEC amended the Exchange Act deregistration provisions applicable to foreign private issuers to permit termination of Exchange Act registration and reporting if the US average daily trading volume of a foreign private issuer’s subject equity securities fell below a certain level relative to the rest of the world.10 In its current form, Rule 13e-3 would not technically be triggered by a specified transaction that had a reasonable likelihood or a purpose of terminating a foreign private issuer’s Exchange Act registration and reporting obligations on the basis of this recently adopted US average trading volume standard. The amendments address this disconnect by expressly providing that Rule 13e-3 is triggered by any specified transaction that has either a reasonable likelihood or a purpose of resulting in the termination of an issuer’s Exchange Act registration and reporting obligations.