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U.S. Securities and Exchange Commission

Securities Exchange Act of 1934 — Section 16

December 23, 1994

Response of the Office of Chief Counsel
Division of Corporation Finance


Thelen, Marrin, Johnson & Bridges
Incoming letter dated November 11, 1994

Securities registered under Section 12 of the Securities Exchange Act of 1934 (the "Exchange Act") that are issued by a foreign company that satisfies the definition of "foreign private issuer" in Rule 3b-4(c) under the Exchange Act are exempt from Section 16 of the Exchange Act. See Exchange Act Rule 3a12-3(b). See also Reed, Elliott, Creech & Roth (Mar. 30, 1993). You have asked, in the case of a foreign company with equity securities registered under Section 12, whether transactions by officers and directors in such company's securities that are effected while the company is a "foreign private issuer" are subject to Section 16 if such company subsequently loses its "foreign private issuer" status within six months of such transactions.

The Division is of the view, as a general matter, that transactions effected by officers and directors of a foreign company before the loss of "foreign private issuer" status are not subject to Section 16. This position would not be applicable, however, if the event that culminated in the loss of the "foreign private issuer" status also involved the company's initial registration of equity securities under Section 12. In such event, Rule 16a-2(a) under the Exchange Act would be applicable.

You also have asked whether directors of a foreign company that qualified as a "foreign private issuer" but subsequently lost its status as such would qualify as disinterested persons for purposes of Rule 16b-3(c)(2)(i) under the Exchange Act if such persons were disinterested since the date the foreign company ceased to be a "foreign private issuer," as defined in Rule 3b-4(c) under the Exchange Act.

The Division is of the view that directors of a foreign company would not be disqualified as disinterested persons under such circumstances if they could not satisfy the requirement that the directors in the prior year not be granted or awarded equity securities pursuant to the plan or any other plan of the issuer or its affiliates, as set forth in Rule 16b-3(c)(2)(i), provided that the directors have not been granted or awarded equity securities in circumstances that would fail to satisfy the requirement set forth in Rule 16b-3(c)(2)(i) since the date the foreign issuer lost its status as a "foreign private issuer." Cf. Cooley Godward Castro Huddleson & Tatum (July 17, 1991).

Because these positions are based on the representations made to the Division in your letter, it should be noted that different facts or conditions might require a different conclusion.


Anita Klein
Special Counsel

Incoming Letter:

The Incoming Letter is in Acrobat format.


Modified: 04/27/2007