Phase Two Recommendations of Task Force on Disclosure Simplification

Federal RegisterJul 24, 1997

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 228, 229, 230, 232, 239, 240, and 249

[Release Nos. 33-7431 and 34-38850; S7-15-96]

RIN 3235-AG80

Phase Two Recommendations of Task Force on Disclosure

Simplification

AGENCY: Securities and Exchange Commission.

ACTION: Final rules.

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SUMMARY: In response to the Report of the Task Force on Disclosure

Simplification, the Commission proposed for comment the elimination and

amendment of certain forms and rules to simplify the disclosure

process. After reviewing the comment letters received on the

Commission's proposals, the Commission is rescinding two forms and one

rule that are no longer necessary or appropriate for the protection of

investors. The Commission also is adopting one rule and amending a

number of rules and forms in order to eliminate unnecessary

requirements and to streamline the disclosure process.

EFFECTIVE DATE: The new rule and amendments will become effective

September 2, 1997. If the EDGAR programming on the amendments affecting

Form 8-A (17 CFR 249.208a) and Rule 462(d) (17 CFR 230.462(d)) is not

completed by this date, the Commission will select a later effective

date for these two amendments and issue an appropriate notice of that

date.

FOR FURTHER INFORMATION CONTACT: Felicia H. Kung, Division of

Corporation Finance, at (202) 942-2990.

SUPPLEMENTARY INFORMATION: After considering certain recommendations of

the Task Force on Disclosure Simplification, as well as the comment

letters received by the Commission on its proposals to implement these

recommendations, the Commission today is adopting amendments to Item

701 1 of Regulation S-B,2 Item 701 3

of Regulation S-K,4 Rule 401,5 Rule

404,6 Rule 424,7 Rule 462,8 Rule

463,9 and Rule 497 10 under the Securities Act of

1933 (``Securities Act'').11 In addition, the Commission is

rescinding Rule 101(c)(5) under Regulation S-T.12 Amendments

are being adopted to Form D,13 Form SB-1,14 Form

SB-2,15 Form S-1,16 Form S-2,17 Form

S-3,18 Form S-11,19 Form S-4,20 Form

F-1,21 Form F-2,22 and Form F-4 23

under the Securities Act. In addition, the Commission is rescinding

Form SR 24 under the Securities Act, and Rule 13a-2

25 and Form 8-B 26 under the Securities Exchange

Act of 1934 (``Exchange Act'').27 The Commission is adopting

Rule 12a-8 28 under the Exchange Act. In addition,

amendments are being adopted with respect to the following Exchange Act

rules and forms: Rule 12d1-2,29 Rule 12g-3,30

Rule 13a1,31 Rule 15d-3,32 Rule 15d-

5,33 Form 8-A,34 Form 10,35 Form 20-

F,36 Form 10-Q,37 Form 10-QSB,38 Form

10-K,39 and Form 10-KSB.40

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\1\ 17 CFR 228.701.

\2\ 17 CFR part 228.

\3\ 17 CFR 229.701.

\4\ 17 CFR part 229.

\5\ 17 CFR 230.401.

\6\ 17 CFR 230.404.

\7\ 17 CFR 230.424.

\8\ 17 CFR 230.462.

\9\ 17 CFR 230.463.

\10\ 17 CFR 230.497.

\11\ 15 U.S.C. 77a et seq.

\12\ 17 CFR 232.101(c)(5).

\13\ 17 CFR 239.500.

\14\ 17 CFR 239.9.

\15\ 17 CFR 239.10.

\16\ 17 CFR 239.11.

\17\ 17 CFR 239.12.

\18\ 17 CFR 239.13.

\19\ 17 CFR 239.18.

\20\ 17 CFR 239.25.

\21\ 17 CFR 239.31.

\22\ 17 CFR 239.32.

\23\ 17 CFR 239.34.

\24\ 17 CFR 239.61.

\25\ 17 CFR 240.13a-2.

\26\ 17 CFR 249.208b.

\27\ 15 U.S.C. 78a et seq.

\28\ 17 CFR 240.12a-8.

\29\ 17 CFR 240.12d1-2.

\30\ 17 CFR 240.12g-3.

\31\ 17 CFR 240.13a-1.

\32\ 17 CFR 240.15d-3.

\33\ 17 CFR 240.15d-5.

\34\ 17 CFR 249.208a.

\35\ 17 CFR 249.210.

\36\ 17 CFR 249.220f.

\37\ 17 CFR 249.308a.

\38\ 17 CFR 249.308b.

\39\ 17 CFR 249.310.

\40\ 17 CFR 249.310b.

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I. Background

In March 1996, the Commission's Task Force on Disclosure

Simplification (``Task Force'') presented its Report 41

recommending the elimination or modification of many rules and forms,

and proposing suggestions for simplifying significant aspects of

securities offerings to the Commission. As a result of the Task Force

Report, the Commission eliminated 44 rules and four forms last

May.42

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\41\ The Task Force Report is available for inspection and

copying in the Commission's public reference room. The Report also

is posted on the Commission's Internet web site (http://

www.sec.gov).

\42\ Release No. 33-7300 (May 31, 1996) [61 FR 30397].

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At the same time that the Commission adopted those changes, it

issued a release proposing for comment the elimination or streamlining

of additional requirements.43 The proposals contained in

that release were based on the Commission's further consideration of

the Task Force recommendations.

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\43\ Release No. 33-7301 (May 31, 1996) [61 FR 30405]

(``Proposing Release'').

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After reviewing the comment letters received 44 and

further considering the proposals, the Commission has determined to

adopt most of the proposals, with certain modifications discussed

below. Two of the proposals are not being adopted. First, the

Commission had proposed that the Form D federal filing requirement be

eliminated for the Regulation D and Section 4(6) exemptions. Filers

would have had to continue to prepare Form D and retain it, but not

file it with the

[[Page 39756]]

Commission. After further consideration, the Commission has determined

that the information contained in Form D is still useful to the

Commission in conducting economic and other analyses of the private

placement market. Since the burden of having to file the Form with the

Commission is minimal once the filer has prepared the Form, the

Commission has determined to retain this requirement.45

Second, the Commission has decided to defer consideration of the

proposal to permit concurrent registration of a public offering under

the Securities Act and a class of securities under the Exchange Act by

filing a single form pending consideration of programming issues

affecting the Commission's Electronic Data Gathering, Analysis and

Retrieval (``EDGAR'') computer system and modifications to the

Commission's record-keeping system that would be required.

Nevertheless, the amendments to the short form Exchange Act

registration statement, Form 8-A, that are being adopted today (as

outlined below) should substantially reduce burdens on issuers. Action

may be taken at a later date on the concurrent registration proposal.

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\44\ The eight comment letters received are available for

inspection and copying in the Commission's public reference room.

Refer to file number S7-15-96. Comment letters that were submitted

via electronic mail may be viewed at the Commission's web site:

http://www.sec.gov.

\45\ The Commission is making a conforming change to the text of

Form D that became necessary as a result of the revisions to

Regulation A in 1992 (Release No. 33-6949 (July 30, 1992) [57 FR

36442]). Those revisions moved, without textual change, the

disqualification provisions of the exemption from Rule 252(c), (d),

(e) and (f), to Rule 262. The text of the first question in Part E

of Form D is being revised to reflect this change.

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The following summarizes the Commission's principal actions

contained in this release: 46

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\46\ The Commission also is adopting two technical amendments

that result from the elimination of the cross-reference sheet

required by former Item 501(b) of Regulation S-K. Release No. 33-

7300. Rule 404 [17 CFR 230.404] under the Securities Act and General

Instruction II.B. of Form S-3 [17 CFR 239.13] under the Securities

Act are being amended to eliminate references to the cross-reference

sheet.

Regulation S-K. Release No. 33-7300. Rule 404 (17 CFR 230.404)

under the Securities Act and General Instruction II.B. of Form S-3

(17 CFR 239.13) under the Securities Act are being amended to

eliminate references to the cross-reference sheet.

Additionally, the Commission is making technical corrections to

Forms 10-K, 10-KSB and 20-F to remove the ``Fee Required'' caption

on the cover page of these Forms. The Commission eliminated the fees

associated with these Forms in September 1996. Release No. 33-7331

(September 17, 1996) (61 FR 49957). A technical amendment to General

Instruction I of Form 10-K also is being adopted to correct an

inaccurate reference to former General Instruction J of that Form.

The Commission also is adopting technical amendments to Forms S-

4 and F-4 to clarify that an issuer may use these Forms to increase

the size of a previously registered offering. As with other forms,

the issuer files an abbreviated registration statement to register

additional securities in an amount and at a price that together

represent no more than a 20% increase in the maximum aggregate

offering price set forth in the earlier effective registration

statement. These amendments were adopted to other Securities Act

registration forms in May 1995 (Release No. 33-7168 (May 11, 1995)

[60 FR 26604]) and should have been adopted with respect to Forms S-

4 and F-4.

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Form SR, the use of proceeds report for initial public

offerings, is eliminated, and the information currently required by

Form SR is required in Exchange Act periodic reports;

Form 8-A, the short-form registration statement used by

reporting companies to register a class of securities under the

Exchange Act, is amended to permit automatic effectiveness for all such

forms filed and to eliminate certain exhibit requirements;

Form 8-B, which pertains to the registration of the

securities of successor issuers, is eliminated;

American Depositary Receipts (``ADRs'') listed on a national

securities exchange and registered on Form F-6 47 under the

Securities Act are exempted from the registration requirements of

Section 12(b) 48 of the Exchange Act, although the

underlying class of securities is not;

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\47\ 17 CFR 239.36.

\48\ 15 U.S.C. 78l(b).

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Rule 401(c) under the Securities Act is amended to permit an

issuer to switch to a shorter Securities Act form at the time any

amendment is filed if the issuer has become eligible to use the shorter

form;

The special filing requirements for radio and television

broadcast prospectuses are being eliminated, so that such prospectuses

will be filed according to the same requirements applicable to all

other prospectuses; and

Post-effective amendments to Securities Act registration

statements filed solely to add exhibits will become effective

automatically upon filing.

II. Forms

A. Form SR

The Commission is eliminating Form SR, the form used by issuers to

report their use of proceeds following an initial public offering.

Instead, this information will be included in the issuer's Exchange Act

periodic reports. The Commission believes that this will make the use

of proceeds information more accessible to investors, as these reports

are more commonly monitored by the public than Form SR. This

information will continue to be required only of first-time

registrants.

Currently, Securities Act Rule 463 requires issuers to report on

Form SR their use of proceeds following an initial public offering

within ten days of the first three months following the effective date

of the registration statement, and every six months thereafter, until

the later of the termination of the offering or the application of all

the offering proceeds.49 This Rule is amended to require a

first-time registrant to report the use of proceeds in its first

periodic Exchange Act report (quarterly report or annual report,

whichever is filed first) after effectiveness, and thereafter in each

of its periodic Exchange Act reports until the registrant has disclosed

the use of all of the proceeds or disclosed the termination of the

offering, whichever is later.50 Although reporting issuers

will now be required to report use of proceeds information on a more

frequent basis, the elimination of Form SR and the consolidation of

disclosure requirements into the periodic reporting forms should ease

reporting burdens on issuers by reducing the number of forms they will

be required to file.51

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\49\ Issuers filed 1,753 Forms SR in fiscal year 1995 and 1,654

Forms SR in fiscal year 1996.

\50\ The Commission also is adopting amendments to Item 701 of

Regulation S-K and Item 701 of Regulation S-B that require all of

the information currently required by Form SR, and amendments to

certain periodic reporting forms under the Exchange Act (Forms 10-Q,

10-QSB, 10-K, and 10-KSB) to cross-reference these disclosure items.

\51\ The Commission had proposed incorporating all of the

requirements of Form SR into each form of Exchange Act periodic

report. In the Proposing Release, however, the Commission solicited

comment on whether to streamline the periodic report forms by

amending Regulations S-B and S-K to include Item 701(f), which

incorporates the Form SR requirements, and amending each Exchange

Act periodic report to cross-reference this Item. The latter

approach has been implemented for all of the relevant Exchange Act

periodic reporting forms except Form 20-F, which does not contain

cross-references to Regulation S-K.

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In addition, the Commission is adopting amendments to Form 20-F,

the Exchange Act annual report form applicable to foreign private

issuers,52 to require disclosure of the use of proceeds

information previously contained in Form SR. Foreign private issuers,

unlike domestic issuers, are not required to file quarterly reports

under the Exchange Act, but are required to submit to the Commission

periodic reports prepared in accordance with home jurisdiction

requirements. As a result, foreign private issuers will be reporting

the use of proceeds information on an annual, rather than quarterly,

basis.

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\52\ ``Foreign private issuer'' is defined in Exchange Act Rule

3b-4(c) (17 CFR 240.3b-4(c)).

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Although the disclosure requirements of Form SR are otherwise

incorporated into the periodic reports without change, the Commission

is adjusting the

[[Page 39757]]

reporting threshold that triggers disclosure of use of proceeds

information to account for inflation. The previous reporting thresholds

used in Form SR, the lesser of five percent of the issuer's total

offering proceeds or $50,000, were established in 1971. The Commission

is raising the reporting threshold under Item 701 to the lesser of five

percent of the issuer's total offering proceeds or

$100,000.53

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\53\ This amendment raises the threshold from that suggested in

the Proposing Release, which simply retained the threshold found in

Form SR. The Commission solicited comment on raising the threshold.

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B. Form 8-A

The Commission is adopting amendments to permit automatic

effectiveness of all registration statements made on Form 8-A, the

short form registration statement used by a currently reporting company

to register a class of securities under Section 12 of the Exchange

Act.54 The amendments should reduce burdens on filers, and

eliminate the current disparate treatment of debt and equity securities

registered on that Form. The Commission also is adopting certain

technical amendments to streamline the Form and further minimize

burdens on filers. Form 8-A requires only a description of the

registrant's securities pursuant to Item 202 of Regulation S-K

55 and the filing of certain exhibits.56

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\54\ 15 U.S.C. 78l. In 1994, the Commission amended its rules to

permit a Form 8-A filed with respect to a class of debt securities

to be listed on a national securities exchange to become effective

simultaneously with the effectiveness of the Securities Act

registration statement pertaining to such debt securities. See

Release No. 34-34922 (Nov. 1, 1994) [59 FR 55342]. The amendments to

Rule 12d1-2 adopted today clarify the automatic effectiveness

procedure applicable to debt securities.

\55\ 17 CFR 229.202. The Commission has amended Form 8-A to

require a description of the registrant's securities pursuant to

Item 202 of Regulation S-B (17 CFR 228.202) for small business

issuers that use Form 8-A.

\56\ Form 8-A registration statements may incorporate by

reference information that is contained in other filings made with

the Commission.

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Consistent with current staff practice, an issuer registering an

initial public offering will be permitted to use Form 8-A even though

it will not be subject to reporting until after the effectiveness of

that Securities Act registration statement.

Currently, a Form 8-A that is filed to register debt securities is

effective automatically. The Commission has determined that there is no

reason to differentiate in this respect between debt and equity

securities. Staff review of these filings is redundant, given that the

Form largely incorporates by reference information contained in other

Commission filings that are subject to staff review. Because the

quality of the disclosure available to the public will not be

compromised, the Commission is adopting amendments today to make all

registration statements filed on Form 8-A effective

automatically.57

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\57\ See amendments to Rule 12d1-2. Acceleration requests will

no longer be required for Forms 8-A, and no effectiveness orders

will be issued with respect to such Forms. A Form 8-A filed to

effective upon the later of the filing of the Form 8-A, the

Commission's receipt of certification from the national securities

exchange, or (if the class of securities is concurrently being

registered under the Securities Act) the effectiveness of the

related Securities Act registration statement. With respect to a

class of securities registered under Section 12(g) of the Exchange

Act, the Form 8-A will become effective upon filing, or if the class

of securities is concurrently being registered under the Securities

Act, the effectiveness of the related Securities Act registration

statement, whichever is later. Filers will check the cover page of

the Form indicating whether registration is sought under Section

12(b) or 12(g), and also will use the appropriate EDGAR form type.

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In addition, after soliciting comments from the national securities

exchanges and considering the responses received, the Commission has

determined that the copy of Form 8-A filed with each relevant national

securities exchange need no longer contain certain exhibits because

issuers must provide the same information as part of the listing

application to the national securities exchanges. As a result, the

Commission is eliminating the requirement to file these exhibits with

the exchanges.58

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\58\ These exhibits include, for example, copies of the last

annual report filed pursuant to Sections 13 or 15(d) of the Exchange

Act, copies of the latest definitive proxy statement filed with the

Commission, and copies of the issuer's charter and by-laws.

Accordingly, the exhibits are already publicly available.

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The amendments adopted today will render the Form 8-A merely a

notice of Section 12 registration that becomes effective automatically.

The Commission has determined that the Form better serves its purpose

as a notice if the Commission is notified separately of each national

securities exchange on which a class of securities is registered. As a

result, if an issuer is registering a class of securities on two or

more national securities exchanges, it should file a separate Form 8-A

for each exchange listing.

As noted above, the Commission has deferred action on its proposal

to permit concurrent Securities Act and Exchange Act registration

without the filing of Form 8-A. The Commission will continue to review

Exchange Act registration and the circumstances in which Form 8-A is

filed in the context of its ongoing efforts to streamline the

registration process.

C. Form 8-B

The Commission has determined that Exchange Act Form 8-B, the

registration statement for certain successor issuers, is of limited

usefulness. Most successor issuers do not need to file a new

registration statement, since they come within the purview of Rule 12g-

3. Under this Rule, successor issuers automatically inherit the

Exchange Act reporting obligations of their predecessors, and file a

Form 8-K to note the succession. As amended today, Rule 12g-3 will

address all situations in which an issuer succeeds to an Exchange Act

registered issuer, so that successor issuers will no longer need to

file Form 8-B.

Adopted in 1936, Form 8-B is used by an issuer to register its

securities when the issuer has no securities registered under Section

12 of the Exchange Act, but has succeeded to an issuer that has

securities registered under Section 12 at the time of the

succession.59 In order to simplify the registration

requirements for successor issuers and eliminate interpretive questions

about this little-used Form, the Commission is rescinding Form 8-B

today.60

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\59\ 15 U.S.C. 78I. ``Succession'' is defined in Exchange Act

Rule 12b-2 (17 CFR 240.12b-2). In the fiscal years 1995 and 1996,

the Commission received only 57 and 58 Form 8-B filings,

respectively.

\60\ The Commission also is adopting certain technical

amendments to account for the elimination of Form 8-B. Conforming

language changes are adopted with respect to Rule 13a-1 of the

Exchange Act, and Rule 13a-2 of the Exchange Act is eliminated. The

Commission is adopting amendments to Rule 12g-3 to incorporate the

substance of these Rules.

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The Commission is adopting amendments to Rule 12g-3 to include any

transactions or securities that were previously covered by Form 8-B,

but not by Rule 12g-3. Pursuant to Rule 12g-3, the equity securities of

a non-reporting issuer that succeeds an issuer with equity securities

registered under Section 12 are automatically deemed to be registered

under Section 12 if the succession occurred by means of merger,

consolidation, exchange of securities or acquisition of assets. Rule

12g-3 is now being amended to include other transactions, such as the

succession of a non-reporting issuer to more than one reporting issuer,

either through consolidation into a new entity or a holding company

formation. Currently, in this type of succession, both existing issuers

must deregister their securities under the Exchange Act, and the

successor must file a Form 8-B. As a result of the amendments adopted

today, the securities of the successor issuer will be deemed

[[Page 39758]]

automatically registered under Section 12 of the Exchange Act.

If the classes of securities issued by each of the predecessor

issuers are registered under the same paragraph of Section

12,61 the class of securities issued by the successor issuer

will be deemed registered under the same paragraph of Section 12. If

the classes of securities issued by the predecessor issuers each are

registered under different paragraphs of Section 12, then the class of

securities issued by the successor issuer will be deemed registered

under Section 12(g). Consistent with prior practice, the successor

issuer will file a Form 8-K with respect to the succession transaction

and subsequently comply with all of the applicable provisions of the

Exchange Act.62

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\61\ A class of securities listed on a national securities

exchange must be registered under Section 12(b) (15 U.S.C. 78l(b)).

An issuer with total assets of $10 million or more and a class of

equity securities held by at least 500 shareholders of record must

U.S.C. 78l(g)]. See also Rule 12g-1 (17 CFR 240.12g-1).

\62\ Items 1 and 2 of Form 8-K [17 CFR 249.308].

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In the situation where the classes of securities issued by the

predecessor issuers each are registered under different paragraphs of

Section 12, the Commission initially had proposed that the successor

issuer would be able to elect the Section 12 paragraph under which it

would be deemed registered. However, upon further consideration, the

Commission has determined that deeming successor issuers to be

registered under Section 12(g) would be preferable in case an issuer is

late in filing its Form 8-K and designating the paragraph of Section 12

under which its securities should be deemed registered. If the

successor decides to list its securities on a national securities

exchange, it will register its securities under Section 12(b) by filing

a Form 8-A, which has been streamlined into a simplified notice that

will be automatically effective as a result of the amendments adopted

today.

In addition to these changes, the Commission is amending Rule 12g-3

to clarify that it applies to issuers with securities registered under

Section 12(b) of the Exchange Act,63 as well as to those

with securities registered under Section 12(g).64 Rule 12g-3

also is being amended to apply to any class of securities, whether

exchange-listed, required to be registered under Section 12(g) of the

Exchange Act, or voluntarily registered under Section 12(g) of the

Exchange Act.65

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\63\ Under Rule 12g-3 as amended, the securities of a successor

to an issuer whose securities are registered under Section 12(b)

also will be deemed registered under Section 12(b) and listed on the

same national securities exchange. However, the exchange may

deregister the securities by filing a Form 25 (17 CFR 249.25) if

that is not the case. By operation of Rule 12g-2 (17 CFR 240.12g-2),

the securities of the successor issuer will automatically be deemed

registered under Section 12(g) of the Exchange Act.

\64\ 15 U.S.C. 78l(g). The securities of a successor to an

issuer whose securities are registered under Section 12(g) also will

be deemed registered under Section 12(g). A successor issuer who

wishes to list its securities on a national securities exchange will

file a Form 8-A to register the securities under Section 12(b).

The Commission also is adopting technical amendments to Rule

12g-3 to accommodate the elimination of Form 8-B. Rule 12g-3 is

being amended to incorporate the annual report requirements of Rule

13a-2 and the relevant portions of Rule 13a-1, both of which contain

references to Form 8-B.

\65\ Section 12(g) of the Exchange Act only requires the

registration of equity securities. It is conceivable that Rule 12g-3

as amended could impose reporting obligations on a limited class of

issuers not currently subjected by Rule 12g-3 to reporting following

a succession because the predecessor issuer had a class of

securities registered under Section 12 voluntarily. However, the

amendment should not impose any undue burdens as a result of this

situation because such an issuer will be able to terminate the

registration under Section 12 immediately following the succession.

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Consistent with some of the amendments being adopted with respect

to Rule 12g-3, the Commission is adopting amendments to Exchange Act

Rule 15d-5, which pertains to the automatic assumption of reporting

obligations by a non-reporting issuer that succeeds to an issuer that

has reporting obligations under Section 15(d) of the Exchange

Act.66 In connection with a succession by merger,

consolidation, exchange of securities or acquisition of assets, Rule

15d-5 automatically transfers the Section 15(d) reporting obligations

of a predecessor issuer to equity securities issued by a non-reporting

successor issuer in connection with the succession. As amended, Rule

15d-5 covers all securities issued by a non-reporting issuer, not just

equity securities.

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\66\ 15 U.S.C. 78o(d).

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III. Registration Requirements

A. Registration Requirements for American Depositary Receipts

The Commission is eliminating the registration requirement under

Section 12(b) of the Exchange Act for ADRs 67 registered on

Form F-6 68 under the Securities Act. This will eliminate

the current disparate treatment of ADRs that are listed on a national

securities exchange, which must be registered under Section 12(b) of

the Exchange Act, compared to ADRs that are traded on the Nasdaq stock

market, which need not be registered under Section 12(g) of the

Exchange Act.69 The Commission is adopting Rule 12a-8

70 under the Exchange Act to exempt ADRs registered on Form

F-6 from the registration requirements of Section 12(b). The Section

12(b) registration requirements, however, will continue to apply to the

class of securities underlying the ADRs.

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\67\ An American depositary share (``ADS'') is the security that

represents an ownership interest in deposited securities, and an ADR

is the physical certificate that evidences ADSs. Because market

participants do not appear to distinguish between ADRs and ADSs, the

term ``ADR'' is used in this Release to refer to either the physical

certificate or the security evidenced by such certificate.

\68\ When an ADR facility is created by a Depositary, the

Depositary files a Form F-6 to register the ADRs that will be issued

from the facility. The transaction of offer and sale covered by the

registration statement on Form F-6 is the deposit of securities into

the facility. The securities so deposited must be separately

registered or must be exempt from registration under the Securities

Act.

\69\ A foreign issuer whose ADRs trade on Nasdaq must register

the common stock underlying the ADRs under Section 12(g) of the

Exchange Act.

\70\ Rule 12a-8 refers to the registration requirements of

Section 12(a) of the Exchange Act, which is technically correct,

rather than Section 12(b), which contains the listing application

requirements for securities registered on a national securities

exchange. However, registration under Section 12(a) is commonly

referred to as Section 12(b) registration.

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Exempting ADRs from Section 12(b) registration is consistent with

the Commission's view of ADRs as separate securities that provide a

mechanism for investing in the underlying securities,71 and

will result in the equal treatment of listed and unlisted ADRs.

Moreover, eliminating the Section 12(b) registration requirement for

ADRs will eliminate unintentional technical violations of the Exchange

Act by issuers that register the underlying shares, but neglect to

page of the Exchange Act registration statement.

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\71\ This view of ADRs as a means of investing in the underlying

securities is consistent with the way that ADRs are treated for

reporting purposes by institutional investment managers under

Section 13(f) of the Exchange Act (15 U.S.C. 78m(f)). The shares of

a foreign issuer that are held through ADRs, as well as the shares

of such issuer held directly, are reported pursuant to Section 13(f)

and Rule 13f-1 (17 CFR 240.13f-1).

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As a matter of common practice in Section 12(g) registration

statements, issuers provide disclosure with respect to the ADRs even

though the ADRs themselves are not being registered. Although it is

likely that issuers would follow the same practice regardless of the

elimination of Section 12(b) registration for ADRs, the Commission has,

upon further consideration, decided to adopt technical amendments to

Form 20-F and Form 10 to ensure that issuers continue to provide

disclosure

[[Page 39759]]

about ADRs in their Exchange Act registration statements.72

Because the actual disclosure provided to investors will not be

affected by the elimination of Section 12(b) registration, the

elimination of such registration requirements should not compromise

investor protection.73

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\72\ Item 14(c) of Form 20-F and Item 11 of Form 10.

\73\ The Commission also is adopting a technical amendment to

Rule 15d-3 of the Exchange Act. Although ADRs are no longer subject

to registration under the Exchange Act, a reporting obligation may

arise with respect to such securities under Section 15(d). Rule 15d-

3 previously suspended such reporting obligation if the depositary

complied with former Item 4(a) of Form F-6. Because former Item 4(a)

no longer exists, see Release No. 33-7300, the Commission is

adopting amendments to Rule 15d-3 to clarify that reporting

obligations are suspended for all ADRs registered on Form F-6.

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B. Securities Act Form Eligibility

The Commission is adopting amendments to Rule 401(c) under the

Securities Act to permit an issuer to switch to a shorter Securities

Act form at the time of filing any amendment if it has become eligible

to use the shorter form since filing its initial registration

statement. These amendments should ease filing burdens on issuers

without affecting the quality of the disclosure available to investors.

Currently, the form and content of a registration statement and

prospectus are determined on the initial filing date. An issuer is not

permitted to reevaluate its status until it files a post-effective

amendment pursuant to Section 10(a)(3)74 of the Securities

Act. As amended, Rule 401(c) will permit issuers to determine the

appropriate form upon filing any amendment, including pre-effective and

post-effective amendments. To ensure that the amendment does not impose

new burdens on issuers, the Rule provides that if an issuer files an

amendment other than for the purposes of Section 10(a)(3), an issuer is

not required to use a form that is different from the one used for its

last Section 10(a)(3) amendment, or if none has been filed, its initial

registration statement.

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\74\ 15 U.S.C. 77j(a)(3).

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C. Rule 424(d)--Radio and Television Broadcast Prospectuses

Today, the Commission is adopting amendments to Rule 424(d) to

eliminate the special filing requirements for radio and television

broadcast prospectuses.75 The Commission has determined that

the previous requirement that such prospectuses be filed at least five

days before they were broadcast or otherwise issued to the public was

not necessary for investor protection. This is especially true in light

of the increasing use of electronic media in securities

offerings.76 As amended, Rule 424(d) still requires that

radio and television broadcast prospectuses be reduced to writing, but

such prospectuses will be filed with the Commission according to the

requirements applicable to other types of prospectuses. As a result of

the amendments adopted today, radio and television broadcast

prospectuses must be filed according to the timing specified in rule

424 (between two to five days after use depending on the subject matter

of the prospectus).77

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\75\ Under Section 10(f) of the Securities Act [15 U.S.C.

77j(f)], the Commission is granted the authority to require radio

and television broadcast prospectuses to be filed along with other

forms of prospectuses used in connection with the sale of the

registered securities.

\76\ The amendments adopted today are consistent with the

positions set forth in Securities Act Release No. 33-7233 (October

6, 1995)(60 FR 53458) concerning the use of electronic media for

delivery purposes.

\77\ Comparable amendments also are being adopted to Rule

497(f), which pertains to the radio and television broadcast

prospectuses of investment companies.

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D. Exhibits

The Commission is adopting Rule 462(d) to permit automatic

effectiveness of a post-effective amendment filed solely to add an

exhibit, where the exhibit will not affect the disclosure in the

prospectus. Adoption of this Rule will eliminate an unnecessary

difference in the treatment of issuers that file on Forms S-3/F-3 and

all other issuers. Currently, issuers that file on Forms S-3/F-3 can

file updated exhibits post-effectively on Form 8-K, which are then

automatically incorporated by reference into their prospectuses.

However, registrants not filing on Form S-3/F-3 can only file updated

exhibits by filing post-effective amendments, which are subject to

possible staff review. Even if such amendments are not selected for

review, registrants face possible delay between the time the amendments

are filed and when they are declared effective. The Commission has

determined that automatic effectiveness of certain exhibits is

appropriate because staff review before effectiveness is unnecessary,

given the generally routine nature of these filings. Rule 462(d) also

would be available to foreign governmental issuers that register debt

securities on Schedule B using shelf registration

procedures.78

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\78\ Release Nos. 33-6240 (September 10, 1980) [45 FR 61609] and

33-6424 (September 2, 1982) (47 FR 39809).

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An issuer will check a box on the cover page of its post-effective

amendment to indicate that automatic effectiveness is

requested.79 Exhibits that may be filed through this

procedure include consents of experts and counsel, and other exhibits

that generally would not require revisions to the disclosure in the

prospectus.

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\79\ Forms SB-1, SB-2, S-1/F-1, S-2/F-2, S-4/F-4, and S-11 have

been amended to include a new check box on the cover page that will

permit automatic effectiveness for certain exhibits that have been

filed post-effectively. In addition to checking the box, filers

should use a new EDGAR form type: POS EX instead of POS AM. Schedule

B filers should simply place a checked box on the facing page of the

amendment to indicate that automatic effectiveness is requested.

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The Rule adopted today is not intended to affect an issuer's

disclosure obligations. Rule 462(d) cannot be used to file exhibits

that would trigger the filing of a post-effective amendment to update

the prospectus. The Rule also does not permit automatic effectiveness

for post-effective amendments that include an exhibit that otherwise

should have been filed pre-effectively. In either case, the issuer may

not check the box for automatic effectiveness.

IV. Certain Findings

Section 23(a) of the Exchange Act 80 requires the

Commission to consider the anti-competitive effects of any rules it

adopts thereunder, if any, and the reasons for its determination that

any burden on competition imposed by such rules is necessary or

appropriate to further the purposes of the Exchange Act. Furthermore,

Section 2 of the Securities Act 81 and Section 3 of the

Exchange Act,82 as amended by the recently enacted National

Securities Markets Improvement Act of 1996,83 provide that

whenever the Commission is engaged in rulemaking and is required to

consider or determine whether an action is necessary or appropriate in

the public interest, the Commission also shall consider, in addition to

the protection of investors, whether the action will promote

efficiency, competition, and capital formation. The Commission has

considered the amendments discussed in this release in light of the

comments received in response to the Proposing Release and the

standards in Section 23(a) of the Exchange Act. Because the amendments

do not effect any substantive change in the information that would be

disclosed by issuers, they do not have any anti-competitive effects.

Furthermore, the amendments eliminate unnecessary disclosure

requirements and streamline the disclosure process,

[[Page 39760]]

thereby promoting efficiency, competition and capital formation.

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\80\ 15 U.S.C. 78w(a).

\81\ 15 U.S.C. 77b.

\82\ 15 U.S.C. 78c.

\83\ Pub. L. No. 104-290, Sec. 106, 110 Stat. 3416 (1996).

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V. Cost-Benefit Analysis

The amendments adopted in this release represent the second phase

of the Commission's consideration of the recommendations of the Task

Force on Disclosure Simplification. The Task Force undertook to review

Commission rules and forms with the goal of simplifying and modernizing

disclosure and filing requirements to reduce the costs of capital

raising, without compromising investor protection. The Commission

sought and considered input from interested parties on how to simplify

the registration and reporting process, and the rule and form changes

in this release were developed from those comments.

Most of the commenters indicated that the proposed form and rule

changes would streamline and simplify the disclosure process. Because

the purpose of the form and rule changes adopted is to eliminate

unnecessary requirements, such changes will reduce the overall costs

and burdens associated with filing requirements generally.

Form SR. The elimination of Form SR and the amendments to require

use of proceeds disclosure instead in Exchange Act periodic reports

will reduce the number of filings made by issuers, and therefore should

ease reporting burdens. The changes may, however, increase reporting

frequency for issuers. Currently, issuers file use of proceeds

disclosure on Form SR semi-annually, and in 1996 1,654 Form SRs were

filed. As noted in the Proposing Release, it is estimated that

approximately 1,470 quarterly reports on Form 10-Q and 490 annual

reports on Form 10-K that include the use of proceeds information would

be filed each year. It is estimated that 795 quarterly reports on Form

10-QSB and 265 annual reports on Form 10-KSB that include the use of

proceeds disclosure would be filed by small business issuers each year.

Because issuers are otherwise required to prepare Exchange Act reports

and would no longer have to prepare a separate form, any burden

resulting from the transfer of the use of proceeds disclosure into the

Exchange Act reports is expected to be minimal.

Further, to offset the potential increase in reporting frequency,

the amendments increase the threshold that triggers the use of proceeds

disclosure (from the lesser of 5% of the total offering proceeds or

$50,000 to the lesser of 5% or $100,000). This change should reduce

somewhat the burden on reporting issuers by limiting the circumstances

in which disclosure is required.

In addition, it is expected that the information on use of proceeds

will be received in a more timely fashion (every three months instead

of every six months after the first report), and will be more

accessible to investors. This information regarding the progress of the

offering is useful to investors and Exchange Act reports are more

commonly monitored by investors. These benefits should outweigh any

increase in reporting burdens from the increased frequency of

disclosures.

Form 8-B. Form 8-B is being eliminated because of its limited

usefulness. Most issuer successions are now covered by Rule 12g-3 and

that Rule is being expanded to cover all situations that formerly

triggered the filing of Form 8-B. In 1996, 58 Form 8-B filings were

made. The rule changes will eliminate a registration burden on

successor issuers, without reducing investor protection, and eliminate

interpretive questions about this infrequently used Form.

ADRs. The Exchange Act registration requirement for ADRs listed on

a national securities exchange is being rescinded to eliminate a

disparity in the registration requirements applicable to listed and

non-listed ADRs. As a result, issuers will no longer be required to

list the ADRs that are to be traded on a national securities exchange

on the cover page of the Exchange Act registration statement. This will

eliminate unintentional technical violations by issuers who register

the underlying class of securities, but do not include the ADRs on the

cover page.

Short Form Registration Statements. Rule 401(c) under the

Securities Act is being amended to permit issuers to file an amendment

on a shorter Securities Act form than was used in its initial

registration statement whenever the issuer is eligible to use a shorter

form. This should reduce filing burdens and printing costs by enabling

issuers to use a shorter form when filing amendments.

Form 8-A. The amendments to make Form 8-A filings covering equity

securities automatically effective should reduce the uncertainty to

issuers of possible pre-effective staff review and resultant delays.

Since the Form largely incorporates by reference information in other

filings already subject to staff review, issuers will benefit from the

reduction in uncertainty and redundant disclosure requirements, without

harm to investors. The amendments also eliminate the requirement to

file with the national exchanges certain exhibits on Form 8-A that

already are publicly available. This change will reduce costs

associated with duplicative filing requirements.

VI. Summary of Final Regulatory Flexibility Analysis

A Final Regulatory Flexibility Analysis (``FRFA'') has been

prepared in accordance with 5 U.S.C. Sec. 604 that relates to the

rescinding of Form SR under the Securities Act, Form 8-B and Rule 13a-2

under the Exchange Act; the addition of Rule 12a-8 under the Exchange

Act; and the other amendments to disclosure requirements under the

Securities Act and Exchange Act.

As discussed more fully in the FRFA, the Commission's rescinding of

form and rule requirements and its adoption of other amendments to

simplify and streamline disclosure requirements will affect small

entities, as defined by the Commission's rules, but only in the same

manner as other entities. The Commission is aware of approximately 1100

Exchange Act reporting companies that currently have assets of $5

million or less. There is no reliable way of determining how many small

businesses may become subject to Commission reporting obligations in

the future, or may otherwise by affected by the rule proposals.

The FRFA notes that alternatives for providing different means of

compliance for small entities or for exempting small entities from the

amendments would be inconsistent with the Commission's statutory

mandate of investor protection. The amendments are intended to simplify

disclosure obligations for all issuers, irrespective of size, such that

further distinctions between companies based on size would not be

appropriate.

The Commission received no comments on the Initial Regulatory

Flexibility Analysis (``IRFA'') prepared in connection with the

Proposing Release, and no comment letters specifically addressed to the

IRFA.

A complete copy of the FRFA is available in Public File No. S7-15-

96.

VII. Paperwork Reduction Act

As set forth in the Proposing Release, Forms 20-F, 10-Q, 10-QSB,

10-K, 10-KSB and 8-A contain collections of information within the

meaning of the Paperwork Reduction Act of 1995 (``PRA'').84

The collection of information requirements contained in these forms

were submitted to OMB for review and were approved by OMB. These

information collections display an OMB control number and expiration

date. An agency may not conduct or sponsor, and

[[Page 39761]]

a person is not required to respond to, a collection of information

unless the agency displays a valid OMB control number.

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\84\ 44 U.S.C. 3501 et seq.

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The Commission is deferring consideration of its proposal to permit

concurrent registration of a public offering under the Securities Act

and a class of securities under the Exchange Act by filing a single

form. As a result, the changes to the Form 8-A information collection

will be adopted that differ from the proposed changes to that

information collection. The total annual burdens associated with Form

8-A will not decrease as much as anticipated under the Proposing

Release.

The descriptions and estimated burdens for the other collection of

information requirements have not changed, and are set forth in the

Proposing Release.

VIII. Statutory Basis for the Amendments

The foregoing amendments are adopted pursuant to Sections 6, 7, 8,

10 and 19(a) of the Securities Act, Sections 3, 12, 13, 15, 23, 35A and

36 of the Exchange Act, and Sections 8, 24, 38 and 54 of the Investment

Company Act of 1940.

List of Subjects

17 CFR Parts 228, 229, 230, 232, 239, 240 and 249

Reporting and recordkeeping requirements, Securities.

Text of the Amendments

In accordance with the foregoing, Title 17, Chapter II of the Code

of Federal Regulations is amended as follows:

PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS

The authority citation for part 228 is revised to read as follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,

77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 77sss,

78l, 78m, 78n, 78o, 78u-5, 78w, 78ll, 80a-8, 80a-29, 80a-30, 80a-37,

80b-11, unless otherwise noted.

2. By amending Sec. 228.701 by revising the heading and adding

paragraph (f) to read as follows:

Sec. 228.701 (Item 701) Recent Sales of Unregistered Securities; Use

of Proceeds from Registered Securities.

* * * * *

(f) As required by Sec. 230.463 of this chapter, following the

effective date of the first registration statement filed under the

Securities Act by an issuer, the issuer or successor issuer shall

report the use of proceeds on its first periodic report filed pursuant

to sections 13(a) and 15(d) of the Exchange Act (15 U.S.C. 78m(a) and

78o(d)) after effectiveness of its Securities Act registration

statement, and thereafter on each of its subsequent periodic reports

filed pursuant to sections 13(a) and 15(d) of the Exchange Act through

the later of disclosure of the application of all the offering

proceeds, or disclosure of the termination of the offering. If a report

of the use of proceeds is required with respect to the first effective

registration statement of the predecessor issuer, the successor issuer

shall provide such a report. The information provided pursuant to

paragraphs (f)(2) through (f)(4) of this Item need only be provided

with respect to the first periodic report filed pursuant to sections

13(a) and 15(d) of the Exchange Act after effectiveness of the

registration statement filed under the Securities Act. Subsequent

periodic reports filed pursuant to sections 13(a) and 15(d) of the

Exchange Act need only provide the information required in paragraphs

(f)(2) through (f)(4) of this Item if any of such required information

has changed since the last periodic report filed. In disclosing the use

of proceeds in the first periodic report filed pursuant to the Exchange

Act, the issuer or successor issuer should include the following

information:

(1) The effective date of the Securities Act registration statement

for which the use of proceeds information is being disclosed and the

Commission file number assigned to the registration statement;

(2) If the offering has commenced, the offering date, and if the

offering has not commenced, an explanation why it has not;

(3) If the offering terminated before any securities were sold, an

explanation for such termination; and

(4) If the offering did not terminate before any securities were

sold, disclose:

(i) Whether the offering has terminated and, if so, whether it

terminated before the sale of all securities registered;

(ii) The name(s) of the managing underwriter(s), if any;

(iii) The title of each class of securities registered and, where a

class of convertible securities is being registered, the title of any

class of securities into which such securities may be converted;

(iv) For each class of securities (other than a class of securities

into which a class of convertible securities registered may be

converted without additional payment to the issuer) the following

information, provided for both the account of the issuer and the

account(s) of any selling security holder(s): the amount registered,

the aggregate price of the offering amount registered, the amount sold

and the aggregate offering price of the amount sold to date;

(v) From the effective date of the Securities Act registration

statement to the ending date of the reporting period, the amount of

expenses incurred for the issuer's account in connection with the

issuance and distribution of the securities registered for underwriting

discounts and commissions, finders' fees, expenses paid to or for

underwriters, other expenses and total expenses. Indicate if a

reasonable estimate for the amount of expenses incurred is provided

instead of the actual amount of expenses. Indicate whether such

payments were:

(A) Direct or indirect payments to directors, officers, general

partners of the issuer or their associates; to persons owning ten (10)

percent or more of any class of equity securities of the issuer; and to

affiliates of the issuer; or

(B) Direct or indirect payments to others;

(vi) The net offering proceeds to the issuer after deducting the

total expenses described in paragraph (f)(4)(v) of this Item;

(vii) From the effective date of the Securities Act registration

statement to the ending date of the reporting period, the amount of net

offering proceeds to the issuer used for construction of plant,

building and facilities; purchase and installation of machinery and

equipment; purchases of real estate; acquisition of other business(es);

repayment of indebtedness; working capital; temporary investments

(which should be specified); and any other purposes for which at least

five (5) percent of the issuer's total offering proceeds or $100,000

(whichever is less) has been used (which should be specified). Indicate

if a reasonable estimate for the amount of net offering proceeds

applied is provided instead of the actual amount of net offering

proceeds used. Indicate whether such payments were:

(A) Direct or indirect payments to directors, officers, general

partners of the issuer or their associates; to persons owning ten (10)

percent or more of any class of equity securities of the issuer; and to

affiliates of the issuer; or

(B) Direct or indirect payments to others; and

(viii) If the use of proceeds in paragraph (f)(4)(vii) of this Item

represents a material change in the use

[[Page 39762]]

of proceeds described in the prospectus, the issuer should describe

briefly the material change.

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES

ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND

CONSERVATION ACT OF 1975--REGULATION S-K

3. The authority citation for part 229 continues to read in part as

follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,

77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn,

77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll(d), 79e,

79n, 79t, 80a-8, 80a-29, 80a-30, 80a-37, 80b-11, unless otherwise

noted.

* * * * *

4. By amending Sec. 229.701 by revising the heading and adding

paragraph (f) before the Instructions to read as follows:

Sec. 229.701 (Item 701) Recent sales of unregistered securities; use

of proceeds from registered securities.

* * * * *

(f) Use of Proceeds. As required by Sec. 230.463 of this chapter,

following the effective date of the first registration statement filed

under the Securities Act by an issuer, the issuer or successor issuer

shall report the use of proceeds on its first periodic report filed

pursuant to sections 13(a) and 15(d) of the Exchange Act (15 U.S.C.

78m(a) and 78o(d)) after effectiveness of its Securities Act

registration statement, and thereafter on each of its subsequent

periodic reports filed pursuant to sections 13(a) and 15(d) of the

Exchange Act through the later of disclosure of the application of all

the offering proceeds, or disclosure of the termination of the

offering. If a report of the use of proceeds is required with respect

to the first effective registration statement of the predecessor

issuer, the successor issuer shall provide such a report. The

information provided pursuant to paragraphs (f)(2) through (f)(4) of

this Item need only be provided with respect to the first periodic

report filed pursuant to sections 13(a) and 15(d) of the Exchange Act

after effectiveness of the registration statement filed under the

Securities Act. Subsequent periodic reports filed pursuant to sections

13(a) and 15(d) of the Exchange Act need only provide the information

required in paragraphs (f)(2) through (f)(4) of this Item if any of

such required information has changed since the last periodic report

filed. In disclosing the use of proceeds in the first periodic report

filed pursuant to the Exchange Act, the issuer or successor issuer

should include the following information: