August 19, 2002
Jonathan M. Katz, Esq.
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Comments on Release No. 34-46300
File No. S7-21-02
Dear Mr. Katz:
We submit our comments on Release No. 34-46300, Certification of Disclosure in Companies' Quarterly and Annual Reports (the "Certification Requirement"). We limit our comments to one aspect of the proposed rule, its applicability to foreign private issuers. For the reasons set forth below, we request that the Securities and Exchange Commission (the "Commission") clarify that the requirement for certification of periodic reports containing interim financial statements does not apply to reports on Form 6-K that contain such financial statements.
By way of background, the Commission requires foreign private issuers to file annual reports on Form 20-F containing audited financial statements that are either prepared according to United States Generally Accepted Accounting Standards ("GAAP") or reconciled to GAAP. The Commission does not require foreign private issuers to file reports containing unaudited interim financial statements, whether quarterly or otherwise. Rule 13a-13(b)(2) excepts foreign private issuers from the requirements of Rule 13a-13 to file quarterly reports on Form 10-Q. Instead, Rule 13a-13(b)(2) provides that foreign private issuers are subject to Rule 13a-16, which states in relevant part as follows:
(a) Every foreign private issuer which is subject to Rule 13a-1 shall make reports on Form 6-K... .
(b) Such reports shall be transmitted promptly after the information required by Form 6-K is made public by the issuer, by the country of its domicile or under the laws of which it was incorporated or organized, or by a foreign securities exchange with which the issuer has filed the information.
(c) Reports furnished pursuant to this rule shall not be deemed "filed" for the purpose of Section 18 of the Act or otherwise subject to the liabilities of that section. (emphasis added)
In its original proposing release for the Certification Requirement, Release No. 34-46079, the Commission stated that it did not intend to apply the Certification Requirement to foreign private issuers that file annual reports on Form 20-F. Among the stated reasons for the Commission's position were:
In Release No. 34-46300, however, the Commission noted that Section 302 of the Sarbanes-Oxley Act of 2002 (the "2002 Act"), requiring the Commission to adopt the Certification Requirement by rulemaking, does not exempt foreign private issuers from the Certification Requirement. Accordingly, the Commission intends to impose the Certification Requirement on Chief Executive Officers and Chief Financial Officers of foreign private issuers in connection with the filing of their annual reports on Form 20-F.
For the following reasons, we request that the Commission's final rules governing the Certification Requirement make it clear that those rules do not apply to reports on Form 6-K transmitted by foreign private issuers to the Commission containing interim financial statements.
Accordingly, it would be inconsistent with the objectives of the federal securities laws to require Chief Executive Officers and Chief Financial Officers to certify interim financial statements transmitted to the Commission under Form 6-K. In addition, imposing the Certification requirement on foreign private issuers may discourage such issuers from entering the U.S. capital markets.
For the foregoing reasons, we ask that with respect to foreign private issuers, the Commission limit the Certification Requirement in its final rules to Annual Reports filed on Form 20-F, and explain in the adopting release that the Certification Requirement does not apply to reports on Form 6-K.
Please feel free to contact Gary J. Wolfe (direct tel. 212-574-1223), Robert E. Lustrin (direct tel. 212-574-1420) or Edward S. Horton (direct tel. 212-574-1265) with any questions that you may have on our comments.
Very truly yours,
Seward & Kissel LLP