December 3, 2001
Mr. Jonathan G. Katz
Secretary, U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609
RE: Proposed Rule: Mandated EDGAR Filing for Foreign Issuers (File No. S7-18-01)
Dear Mr. Katz,
On behalf of major Japanese corporations ("the Group") registered with the SEC (see attached list of companies), Matsushita Electric Industrial Co., Ltd. is pleased to submit comments on the recent proposal published by the Securities and Exchange Commission ("SEC") regarding amendments (the "Proposed Amendments") to the rules governing the Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system. The Group includes top corporations from manufacturing, distribution and other industries. The Group hopes that the ensuing suggestions will help the SEC to determine whether to adopt these proposals.
Please see the following comments and suggestions, which represent a consensus of the Group.
I. Documents currently prepared and filed in the English language
a. Form 20-F
Although filing Form 20-F with the SEC through EDGAR represents a significant cost, it is the Group's opinion that the value to investors and other interested parties justifies this cost. We therefore agree with the filing of Form 20-F through EDGAR. Currently, there are 5 Japanese corporations that file Form 20-F through EDGAR.
b. Other English language documents (Form 6-K, etc.)
With respect to certain other documents, the conversion from the original format to HTML or ASCII for EDGAR filing, while not impossible, would be extremely time-consuming and costly, including the proof-reading review process, and could corrupt the integrity of the document. (See III. below)
II. Japanese-language documents disclosed in Japan, which are subsequently translated into English and filed with the SEC
Most of the financial and legal documents contain highly specialized terms and expressions. Currently in Japan, there are no professional translation services that can facilitate an accurate translation of these documents in a timely, cost-effective manner. If full translation of such foreign language documents (Japanese in particular) became compulsory, as currently proposed, it would require the assistance of reputed accounting and/or legal firms with qualified native editors of English. Needless to say, retaining such services would be extremely expensive.
1. Continuous reporting requirements under The Securities Exchange Act of 1934
a. The SEC has indicated in the release governing the Proposed
Amendments that it intends to eliminate the summary option for Japanese-language documents. However, elimination of this option would unduly disadvantage Japanese filers, by requiring issuers to regularly spend significant amounts of time and money to complete translations, as mentioned in the above. Japanese companies cannot prepare full and accurate translations and make them available to investors in a timely manner. The currently approved method of disclosure is more effective in terms of providing investors and stockholders with information in a timely manner.
b. Currently, almost all information required to be disclosed under Japanese securities rules and regulations is already filed with the SEC by Japanese registrants through Form 20-F, press releases, and other similar documents. However, in conformance with the General Instructions governing Form 6-K, redundant information, and certain non-consolidated financial information that pertains primarily to the parent company is usually not filed with the SEC. In the event that full English translations of such duplicated or unnecessary information (including lengthy business operations reports pursuant to Japanese securities rules and regulations) were mandated, it would require 2 or 3 months, and expenses in excess of US$200,000. We believe that this would impose an unreasonable burden on Japanese corporations. We therefore request that such reports continue to be exempt from filing requirements.
2. Issue of new (or additional) securities and M&A documents (The Securities Act of 1933, etc.)
In regards to documents concerning the issue of new securities (including the additional issue of existing outstanding securities) and those related to M&A and other similar actions, both taking place outside of the United States (Japan, Europe, etc.), translating such bulky foreign language documents (Japanese in particular) would require a vast amount of money and effort. Furthermore, as such matters do not directly concern U.S. investors, we request that the current policy of permitting the submission of relevant press releases and other similar documents through Form 6-K be continued.
3. Mandated certification of English translations
The proposed requirement that the representation be signed by a designated officer of the issuer is problematic because the vast majority of corporate officers of Japanese corporations are Japanese. Officers of Japanese corporations often do not have sufficient command of the English language to certify the business, financial and legal jargon contained in many of these filings. We request that the SEC not require the certification of filings for which English translations are required. However, in the event that certification is deemed necessary, we request that certification from a qualified expert (not necessarily an officer) be accepted.
III. Electronic filing format
Under the proposed new rules, issuers are required to format documents filed through EDGAR using either HTML or ASCII. Both of these formats require a great deal of time and money to verify after electronic conversion from the original format, as errors during conversion are frequent, particularly in annual reports, which include numerous charts and graphs. Although the PDF format would present some technical and cost issues, these could be overcome without significant difficulty. We thus strongly request that the SEC allow the submission of PDF documents through EDGAR.
IV. Transition Period
The Proposed Amendments would impose significant filing burdens on foreign issuers. Such Amendments will require time to properly consider, prepare for and test new methods. The Group thus suggests that the proposed four-month transition period be extended to at least one year. In the case that any major difficulties currently unforeseen (technical or otherwise) should arise during the transition period, we would like to reserve the right to submit further comments at such time.
Director, Member of the Board and
Chief Financial Officer
Matsushita Electric Industrial Co., Ltd.
(on behalf of 17 Japanese registrants)
Companies Represented in the Group
1. Canon Inc.
2. Hitachi, Ltd.
3. Honda Motor Co., Ltd.
4. Ito-Yokado Co., Ltd
5. Komatsu Ltd.
6. Kubota Corporation
7. Kyocera Corporation
8. Makita Corporation
9. Matsushita Electric Industrial Co., Ltd.
10. Mitsui & Co., Ltd.
11. NEC Corporation
12. NIDEC CORPORATION
13. NIPPON TELEGRAPH AND TELEPHONE CORPORATION
14. PIONEER CORPORATION
15. Ricoh Company, Ltd.
16. TDK Corporation
17. Wacoal Corp.