Ziegler, Ziegler & Altman LLP
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November 28, 2001
Mr. Jonathan G. Katz
Secretary
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
Comments Re: S7-18-01; Release Nos. 33-8016, 34-44868, International Series Release No. 1250
Dear Mr. Katz:
Ziegler, Ziegler & Altman LLP appreciates the opportunity to comment on Mandated Edgar Filing for Foreign Issuers (the "Proposed Amendments"), which sets forth proposed amendments to Regulation S-T requiring foreign private issuers and foreign governments to file substantially all of their U.S. securities documents with the United States Securities and Exchange Commission (the "Commission") electronically through the Commission's Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system. While we are supportive of the Commission's goal to facilitate the rapid dissemination of financial and business information about foreign issuers and support many of the Proposed Amendments, we do not believe that requiring certain or all Form F-6s and Form 6-Ks to be filed through EDGAR will serve those purposes.
Our firm devotes substantial efforts to the representation of depositary banks, transfer agents and foreign private issuers in their American depositary receipt, direct listing and New York registry share transactions. Our comments are based on our experience in representing our clientele in those transactions and are not necessarily intended to express the views of each of those clients.
As described below, we respectfully urge the Commission not to require registration statements on Form F-6 to be filed electronically or, to the extent so required, only to require electronic filing of those forms where (i) the foreign private issuer is currently filing annual reports on Form 20-F and (ii) the depositary is not submitting a copy of the form of depositary receipt (i.e. the ADR prospectus) through EDGAR under Rule 424. We also request that the Commission permit Form 6-Ks to be submitted in paper form to the extent they relate to annual reports or press releases carried by one or more of the major news retrieval or wire services (including paid services).
Form F-6
The Form F-6 is an anomaly among registration statements. It is used to register American depositary shares issuable by depositary banks, which depositary shares represent shares of foreign private issuers. Pursuant to the instructions to Form F-6, the legal entity created by the agreement for the issuance of the depositary receipts is the registrant and signs the Form F-6 in that capacity (through the depositary). In the context of a sponsored depositary receipt, the issuer of the deposited securities and certain of its officers and directors must also sign the Form F-6.
Except as set forth below, the Form F-6 itself contains no substantive disclosure about the foreign issuer or any other party. The only contents of the Form F-6 are the name of the issuer of the deposited securities, the depositary's name and address, the number of deposited securities represented by each American depositary share and the signature pages. Required exhibits to the Form F-6 include either the Deposit Agreement or terms of the depositary receipts, as applicable, and an opinion of the depositary's counsel as to the legality of the depositary shares.
The Deposit Agreement is a largely standardized form which contains the basic terms of the ADRs themselves. Once the Deposit Agreement is executed by the relevant parties , standard practice at this firm is to submit the final prospectus (i.e. the final form of depositary receipt) to the Commission pursuant to the requirements of Rule 424.
It is our belief that requiring Form F-6s to be filed through EDGAR will unnecessarily increase the costs incurred by depositary banks and foreign private issuers and will not provide the investing public with the benefits for which the EDGAR disclosure system was intended. The additional cost which will be incurred by depositary banks and others in EDGARizing Form F-6s and Deposit Agreements could increase a depositary's costs related to such filing by up to 20% or more from those currently paid by such institutions to make such filings. The benefits of EDGAR filing of Form F-6s will be minimal in part because Form F-6s contain no issuer related disclosure and because the form of deposit agreement is largely uniform from transaction to transaction. The additional costs to issuers and depositary banks would be further increased if depositary banks were required to submit the form of ADR which comprises the final prospectus for the depositary receipts through the EDGAR system.
We ask that the Commission reconsider its entire proposal with respect to requiring Form F-6s be filed through EDGAR. However, in the event that the Commission does not wish to reconsider the entirety of its proposal with respect to Form F-6s, we respectfully request that the Commission revise the Proposed Amendments to provide that (i) only Form F-6s filed with respect to issuers who are Exchange Act reporting companies be required to be filed through EDGAR and that Rule 12g3-2(b) foreign private issuers (i.e. non-exchange listed or Nasdaq/OTCBB quoted issuers) be permitted to file Form F-6s in paper form and/or (ii) depositary banks not be required to file any Form F-6s through EDGAR so long as, within a reasonable period after the effectiveness of such Form F-6 (i.e. 30 days), the depositary bank submits the form of depositary receipt (i.e. the prospectus) to the Commission through the EDGAR system.
Form 6-K
A foreign private issuer is required to submit Form 6-Ks when material information about it or its subsidiaries (i) is made, or required to be made, public pursuant to the law of the jurisdiction of its domicile or in which it is incorporated or organized, or (ii) is filed, or required to be filed, with a stock exchange on which its securities are traded and which was made public by that exchange, or (iii) is distributed, or is required to be distributed, to its security holders.
As a matter of practice, many foreign private issuers submit each and every press announcement released by them to the Commission on a Form 6-K without determining whether the information in those releases is "material". The reason for the practice is that submission of the Form 6-K in paper format is inexpensive and simple because it involves little more than attaching a press release to a cover and signature page. In the case of press releases, those Forms are submitted to the Commission promptly after the foreign private issuer releases the same information through such issuer's normal channels of distribution (i.e. to the news retrieval and wire services), which almost surely results in the text of the press release or the substance thereof being made available to investors on any number of free and subscription-based web sites. As a result, Form 6-Ks are submitted on a frequent basis.
If the Commission required all Form 6-Ks, including press release Form 6-Ks, to be submitted through EDGAR, the costs incurred by foreign private issuers in arranging for press releases to be translated, EDGARized and submitted to the Commission would be significantly increased. Accordingly, we believe foreign private issuers would likely re-evaluate their current policies of submitting all or significantly all press releases on Form 6-K. In addition, because many foreign private issuers handle their Form 6-K filings in-house, we believe that the EDGAR process will unduly burden those issuers. We believe that the result of requiring all Form 6-Ks to be submitted via EDGAR will be that foreign private issuers submit fewer Form 6-Ks, thereby reducing the SEC available disclosure readily available to investors through document retrieval services.
We respectfully request that the requirement that Form 6-Ks be submitted via EDGAR be revised to permit Form 6-Ks to be submitted in paper form where they relate to press releases carried by one or more of the major news retrieval or wire services (including paid services).
We also request that the Commission reconsider the proposed requirement that annual reports be submitted on Form 6-K through EDGAR. In most or all circumstances the substance of annual reports is also contained in the Forms 20-F, although the annual reports may be presented in a more user-friendly format (with pictures and a letter from management etc.). Where foreign private issuers are required to file Form 20-Fs through EDGAR, little purpose would be served in also requiring those same issuers to submit their annual reports through EDGAR. We believe that the costs and time involved in EDGARIZING annual reports far outweighs the benefits received from having annual reports submitted through EDGAR. Furthermore, such a requirement may result in foreign private issuers not preparing such "finished" annual reports for investors but instead providing investors Form 20-Fs in their place.
Conclusion
In conclusion, we request that the Proposed Amendments to the rules and forms governing the Commission's EDGAR system be modified in the following manner:
Form F-6
1. Foreign Private Issuers and depositary banks should have the option of filing Form F-6s through EDGAR but should not be required to file those forms in that manner; or
2. The Commission should not require Form F-6s to be filed through EDGAR if the depositary bank or its agent submits the form of depositary receipt (i.e. the prospectus) to the Commission through the EDGAR system within 30 days after the effectiveness of the Form F-6; or
3. If the Commission requires Form F-6s to be filed through EDGAR, that requirement should only extend to Form F-6s filed with respect to foreign private issuers who are Exchange Act reporting companies.
Form 6-K
1. The Commission should not require Form 6-Ks to be submitted through EDGAR to the extent they relate to press releases otherwise made publicly available by such foreign private issuer or annual reports.
We appreciate your consideration of our comments. Please feel free to contact the undersigned if you have any questions or would like additional information with respect thereto.
Very truly yours,
Ziegler, Ziegler & Altman LLP
/s/Scott A. Ziegler
By: Scott A. Ziegler