December 10, 2001
Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609
Reference: File No. S7-18-01
Release Nos. 33-8016; 34-44868
International Series Release No. 1250
Dear Mr. Katz:
Deloitte Touche Tohmatsu is pleased to respond to the Securities and Exchange Commission's (the "Commission") request for comment on the proposed rule, Mandated Edgar Filing for Foreign Issuers (the "proposal" or "proposed rule").
We support the Commission's efforts to facilitate more rapid dissemination, and efficient storage, retrieval and analysis of, material information about foreign issuers. We generally agree with the proposal to require that foreign issuers use the Electronic Data Gathering, Analysis, and Retrieval ("EDGAR") system and believe that, if adopted, the proposed rule will result in more efficient access to information contained in documents filed with the Commission. However, we believe that certain aspects of the proposal could be improved to allow for a more orderly transition to the EDGAR system, particularly for certain registrants. These include:
The proposed four-month transition period may be too short.
Depending on when any final rule is adopted, we believe that the proposed four-month transition period may be too short for foreign issuers to implement the proposed requirements without undue burden. This is particularly true for foreign issuers with years ending on or before June 30, 2002.
Certain foreign issuers, such as those in Japan and Australia, often have year-ends in March or June. If the proposed rule was finalized in the first half of next year, companies with year ends on or before June 30, 2002 would be required to file their annual reports on Form 20-F on the EDGAR system beginning in September.1 To allow companies to plan for the conversion, we suggest that the Commission consider revising the proposed transition period such that foreign issuers with year-ends after June 30, 2002 be required to submit their annual reports on Form 20-F on the EDGAR system.
Additionally, the Commission may wish to consider developing separate transition rules for filings other than annual reports filed on Form 20-F. This would be consistent with the transition on the Commission's recent changes to Form 20-F.2 In this regard, we suggest that the Commission require that all other filings by foreign private issuers subsequent to December 31, 2002 be filed on the EDGAR system (assuming a final rule in the first half of next year).
For a reasonable period of time, foreign issuers should have additional time to file Form 6-K on the EDGAR system..
Many foreign issuers currently use local printing companies and smaller U.S. law firms to produce documents for their filings with the Commission. It is likely that these issuers will continue to use these service providers for future filings on the EDGAR system.
In the case of annual reports and other transactional filings, these issuers and their service providers should have adequate time and resources to ensure timely filing on the EDGAR system. However, in the case of Form 6-K filings, there may not be ample time to file such documents on EDGAR within the timeframe required.3
In order to permit the timely submission of information on Form 6-K and to prevent undue hardship for foreign issuers and their service providers, we suggest that the Commission consider allowing foreign issuers to continue to file on paper until December 31, 2003, but require that the material be filed on the EDGAR system within 30 days of submitting the paper filing.
Foreign issuers should not be precluded from providing English summaries of certain foreign language exhibits.
General translation services generally are available to foreign issuers. However, we understand that in many countries there is a shortage of translators who are knowledgeable in business terminology. Consequently, in certain cases, only literal translations of documents can be obtained at a reasonable cost. While literal translations may be obtainable at a reasonable cost, such translations may fail to convey the original spirit and meaning of complicated documents.
We understand the need for investors and other interested parties in the United States to be able to read all material information about foreign issuers. To meet this need, the Commission has in the past interpreted the paper filing rules to permit English summaries of foreign language exhibits in certain limited circumstances. We suggest that the Commission consider retaining this policy of accepting English summaries in certain circumstances.
The current EDGAR filing hours should be extended.
For many foreign issuers, particularly those in Asia, the current EDGAR filing hours could prove to be an undue burden as the business hours in Asia overlap minimally, or not at all, with the EDGAR filing hours.
We recognize that a certain period of time may be required to maintain and periodically upgrade the EDGAR system. We also recognize that the Commission may incur additional costs by extending the EDGAR filing hours. However, after taking into consideration these concerns, foreign issuers should be given an opportunity to file during as long a period comprising local business hours as practicable.
* * * * *
We would be pleased to discuss our comments with you. If you have any questions please contact P. Nicholas Fraser at (212) 492-4118, John E. Wolfson at (203) 761-3741 or Joel S. Osnoss at (212) 436-3352.
Very truly yours,
Deloitte Touche Tohmatsu
|1||Item A (b) of the General Instructions of Form 20-F requires a company to file its annual report within six months after the end of the fiscal year.|
|2||See the effective dates and transition provisions in Release 34-41936, International Disclosure Standards, September 1999.|
|3||Item B of the General Instructions of Form 6-K requires a company to file promptly after the material contained in the report is made public in the local jurisdiction.|