SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 228, 229, 230, 232, 239, 240, and 249 [Release Nos. 33-7431 and 34-38850; S7-15-96] RIN 3235-AG80 Phase Two Recommendations of Task Force on Disclosure Simplification AGENCY: Securities and Exchange Commission. ACTION: Final Rules. SUMMARY: In response to the Report of the Task Force on Disclosure Simplification, the Commission proposed for comment the elimination and amendment of certain forms and rules to simplify the disclosure process. After reviewing the comment letters received on the Commission's proposals, the Commission is rescinding two forms and one rule that are no longer necessary or appropriate for the protection of investors. The Commission also is adopting one rule and amending a number of rules and forms in order to eliminate unnecessary requirements and to streamline the disclosure process. EFFECTIVE DATE: The new rule and amendments will become effective September 2, 1997. If the EDGAR programming on the amendments affecting Form 8-A [17 CFR 249.208a] and Rule 462(d) [17 CFR 230.462(d)] is not completed by this date, the Commission will select a later effective date for these two revisions and issue an appropriate notice of that date. FOR FURTHER INFORMATION CONTACT: Felicia H. Kung, Division of Corporation Finance, at (202) 942-2990. SUPPLEMENTARY INFORMATION: After considering certain recommendations of the Task Force on Disclosure Simplification, as well as the comment letters received by the Commission on its proposals to implement these recommendations, the Commission today is adopting amendments to Item 701 <(1)> of Regulation S-B, <(2)> Item 701 <(3)> of Regulation S-K, <(4)> Rule 401, <(5)> Rule 404, <(6)> Rule 424, <(7)> Rule 462, <(8)> Rule 463, <(9)> and Rule 497 <(10)> under the Securities Act of 1933 ("Securities Act"). <(11)> In addition, the Commission is rescinding Rule 101(c)(5) under Regulation S-T. <(12)> Amendments are being adopted to Form D, <(13)> Form SB-1, <(14)> Form SB-2, <(15)> Form S-1, <(16)> Form S-2, <(17)> Form S-3, <(18)> Form <(1)> 17 CFR 228.701. <(2)> 17 CFR Part 228. <(3)> 17 CFR 229.701. <(4)> 17 CFR Part 229. <(5)> 17 CFR 230.401. <(6)> 17 CFR 230.404. <(7)> 17 CFR 230.424. <(8)> 17 CFR 230.462. <(9)> 17 CFR 230.463. <(10)> 17 CFR 230.497. <(11)> 15 U.S.C. 77a et seq. <(12)> 17 CFR 232.101(c)(5). <(13)> 17 CFR 239.500. <(14)> 17 CFR 239.9. <(15)> 17 CFR 239.10. <(16)> 17 CFR 239.11. <(17)> 17 CFR 239.12. ======END OF PAGE 2====== S-11, <(19)> Form S-4, <(20)> Form F-1, <(21)> Form F-2, <(22)> and Form F-4 <(23)> under the Securities Act. In addition, the Commission is rescinding Form SR <(24)> under the Securities Act, and Rule 13a-2 <(25)> and Form 8-B <(26)> under the Securities Exchange Act of 1934 ("Exchange Act"). <(27)> The Commission is adopting Rule 12a-8 <(28)> under the Exchange Act. In addition, amendments are being adopted with respect to the following Exchange Act rules and forms: Rule 12d1-2, <(29)> Rule 12g-3, <(30)> Rule 13a-1, <(31)> Rule 15d-3, <(32)> Rule 15d-5, <(33)> Form 8-A <(34)>, Form 10, <(35)> <(18)>(...continued) <(18)> 17 CFR 239.13. <(19)> 17 CFR 239.18. <(20)> 17 CFR 239.25. <(21)> 17 CFR 239.31. <(22)> 17 CFR 239.32. <(23)> 17 CFR 239.34. <(24)> 17 CFR 239.61. <(25)> 17 CFR 240.13a-2. <(26)> 17 CFR 249.208b. <(27)> 15 U.S.C. 78a et seq. <(28)> 17 CFR 240.12a-8. <(29)> 17 CFR 240.12d1-2. <(30)> 17 CFR 240.12g-3. <(31)> 17 CFR 240.13a-1. <(32)> 17 CFR 240.15d-3. <(33)> 17 CFR 240.15d-5. ======END OF PAGE 3====== Form 20-F, <(36)> Form 10-Q, <(37)> Form 10-QSB, <(38)> Form 10-K, <(39)> and Form 10-KSB. <(40)> I. BACKGROUND In March 1996, the Commission's Task Force on Disclosure Simplification ("Task Force") presented its Report <(41)> recommending the elimination or modification of many rules and forms, and proposing suggestions for simplifying significant aspects of securities offerings to the Commission. As a result of the Task Force Report, the Commission eliminated 44 rules and four forms last May. <(42)> At the same time that the Commission adopted those changes, it issued a release proposing for comment the elimination or streamlining of additional requirements. <(43)> The proposals contained in that release were based on the Commission's further consideration of the Task Force recommendations. <(34)>(...continued) <(34)> 17 CFR 249.208a. <(35)> 17 CFR 249.210. <(36)> 17 CFR 249.220f. <(37)> 17 CFR 249.308a. <(38)> 17 CFR 249.308b. <(39)> 17 CFR 249.310. <(40)> 17 CFR 249.310b. <(41)> The Task Force Report is available for inspection and copying in the Commission's public reference room. The Report also is posted on the Commission's Internet web site (http://www.sec.gov). <(42)> Release No. 33-7300 (May 31, 1996)[61 FR 30397]. <(43)> Release No. 33-7301 (May 31, 1996)[61 FR 30405] ("Proposing Release"). ======END OF PAGE 4====== After reviewing the comment letters received <(44)> and further considering the proposals, the Commission has determined to adopt most of the proposals, with certain modifications discussed below. Two of the proposals are not being adopted. First, the Commission had proposed that the Form D federal filing requirement be eliminated for the Regulation D and Section 4(6) exemptions. Filers would have had to continue to prepare Form D and retain it, but not file it with the Commission. After further consideration, the Commission has determined that the information contained in Form D is still useful to the Commission in conducting economic and other analyses of the private placement market. Since the burden of having to file the Form with the Commission is minimal once the filer has prepared the Form, the Commission has determined to retain this requirement. <(45)> Second, the Commission has decided to defer consideration of the proposal to permit concurrent registration of a public offering under the Securities Act and a class of securities under the Exchange Act by filing a single form pending consideration of programming issues affecting the Commission's Electronic Data Gathering, Analysis and Retrieval ("EDGAR") computer system and modifications to the Commission's <(44)> The eight comment letters received are available for inspection and copying in the Commission's public reference room. Refer to file number S7-15-96. Comment letters that were submitted via electronic mail may be viewed at the Commission's web site: http://www.sec.gov. <(45)> The Commission is making a conforming change to the text of Form D that became necessary as a result of the revisions to Regulation A in 1992 (Release No. 33-6949 (July 30, 1992) [57 FR 36442]). Those revisions moved, without textual change, the disqualification provisions of the exemption from Rule 252(c), (d), (e) and (f), to Rule 262. The text of the first question in Part E of Form D is being revised to reflect this change. ======END OF PAGE 5====== record-keeping system that would be required. Nevertheless, the amendments to the short form Exchange Act registration statement, Form 8-A, that are being adopted today (as outlined below) should substantially reduce burdens on issuers. Action may be taken at a later date on the concurrent registration proposal. The following summarizes the Commission's principal actions contained in this release <(46)>: * Form SR, the use of proceeds report for initial public offerings, is eliminated, and the information currently required by Form SR is required in Exchange Act periodic reports; <(46)> The Commission also is adopting two technical amendments that result from the elimination of the cross-reference sheet required by former Item 501(b) of Regulation S-K. Release No. 33-7300. Rule 404 [17 CFR 230.404] under the Securities Act and General Instruction II.B. of Form S-3 [17 CFR 239.13] under the Securities Act are being amended to eliminate references to the cross-reference sheet. Additionally, the Commission is making technical corrections to Forms 10-K, 10-KSB and 20-F to remove the "Fee Required" caption on the cover page of these Forms. The Commission eliminated the fees associated with these Forms in September 1996. Release No. 33-7331(September 17, 1996)[61 FR 49957]. A technical amendment to General Instruction I of Form 10-K also is being adopted to correct an inaccurate reference to former General Instruction J of that Form. The Commission also is adopting technical amendments to Forms S-4 and F-4 to clarify that an issuer may use these Forms to increase the size of a previously registered offering. As with other forms, the issuer files an abbreviated registration statement to register additional securities in an amount and at a price that together represent no more than a 20% increase in the maximum aggregate offering price set forth in the earlier effective registration statement. These amendments were adopted to other Securities Act registration forms in May 1995 (Release No. 33-7168 (May 11, 1995)[60 FR 26604]) and should have been adopted with respect to Forms S-4 and F-4. ======END OF PAGE 6====== * Form 8-A, the short-form registration statement used by reporting companies to register a class of securities under the Exchange Act, is amended to permit automatic effectiveness for all such forms filed and to eliminate certain exhibit requirements; * Form 8-B, which pertains to the registration of the securities of successor issuers, is eliminated; * American Depositary Receipts ("ADRs") listed on a national securities exchange and registered on Form F-6 <(47)> under the Securities Act are exempted from the registration requirements of Section 12(b) <(48)> of the Exchange Act, although the underlying class of securities is not; * Rule 401(c) under the Securities Act is amended to permit an issuer to switch to a shorter Securities Act form at the time any amendment is filed if the issuer has become eligible to use the shorter form; * The special filing requirements for radio and television broadcast prospectuses are being eliminated, so that such prospectuses will be filed according to the same requirements applicable to all other prospectuses; and * Post-effective amendments to Securities Act registration statements filed solely to add exhibits will become effective automatically upon filing. II. FORMS A. Form SR <(47)> 17 CFR 239.36. <(48)> 15 U.S.C. 78l(b). ======END OF PAGE 7====== The Commission is eliminating Form SR, the form used by issuers to report their use of proceeds following an initial public offering. Instead, this information will be included in the issuer's Exchange Act periodic reports. The Commission believes that this will make the use of proceeds information more accessible to investors, as these reports are more commonly monitored by the public than Form SR. This information will continue to be required only of first-time registrants. Currently, Securities Act Rule 463 requires issuers to report on Form SR their use of proceeds following an initial public offering within ten days of the first three months following the effective date of the registration statement, and every six months thereafter, until the later of the termination of the offering or the application of all the offering proceeds. <(49)> This Rule is amended to require a first-time registrant to report the use of proceeds in its first periodic Exchange Act report (quarterly report or annual report, whichever is filed first) after effectiveness, and thereafter in each of its periodic Exchange Act reports until the registrant has disclosed the use of all of the proceeds or disclosed the termination of the offering, whichever is later. <(50)> Although reporting issuers will now be required to report use of proceeds information on a more frequent basis, the elimination of Form SR and the consolidation of disclosure requirements into the periodic reporting forms <(49)> Issuers filed 1,753 Forms SR in fiscal year 1995 and 1,654 Forms SR in fiscal year 1996. <(50)> The Commission also is adopting amendments to Item 701 of Regulation S-K and Item 701 of Regulation S-B that require all of the information currently required by Form SR, and amendments to certain periodic reporting forms under the Exchange Act (Forms 10-Q, 10-QSB, 10-K, and 10-KSB) to cross-referencethese disclosure items. ======END OF PAGE 8====== should ease reporting burdens on issuers by reducing the number of forms they will be required to file. <(51)> In addition, the Commission is adopting amendments to Form 20-F, the Exchange Act annual report form applicable to foreign private issuers, <(52)> to require disclosure of the use of proceeds information previously contained in Form SR. Foreign private issuers, unlike domestic issuers, are not required to file quarterly reports under the Exchange Act, but are required to submit to the Commission periodic reports prepared in accordance with home jurisdiction requirements. As a result, foreign private issuers will be reporting the use of proceeds information on an annual, rather than quarterly, basis. Although the disclosure requirements of Form SR are otherwise incorporated into the periodic reports without change, the Commission is adjusting the reporting threshold that triggers disclosure of use of proceeds information to account for inflation. The previous reporting thresholds used in Form SR, the lesser of five percent of the issuer's total offering proceeds or $50,000, were established in 1971. The Commission is raising the reporting threshold under Item 701 to the lesser <(51)> The Commission had proposed incorporating all of the requirements of Form SR into each form of Exchange Act periodic report. In the Proposing Release, however, the Commission solicited comment on whether to streamline the periodic report forms by amending Regulations S-B and S-K to include Item 701(f), which incorporates the Form SR requirements, and amending each Exchange Act periodic report to cross-reference this Item. The latter approach has been implemented for all of the relevant Exchange Act periodic reporting forms except Form 20-F, which does not contain cross- references to Regulation S-K. <(52)> "Foreign private issuer" is defined in Exchange Act Rule 3b-4(c) [17 CFR 240.3b-4(c)]. ======END OF PAGE 9====== of five percent of the issuer's total offering proceeds or $100,000. <(53)> B. Form 8-A The Commission is adopting amendments to permit automatic effectiveness of all registration statements made on Form 8-A, the short form registration statement used by a currently reporting company to register a class of securities under Section 12 of the Exchange Act. <(54)> The amendments should reduce burdens on filers, and eliminate the current disparate treatment of debt and equity securities registered on that Form. The Commission also is adopting certain technical amendments to streamline the Form and further minimize burdens on filers. Form 8-A requires only a description of the registrant's securities pursuant to Item 202 of Regulation S-K <(55)> and the filing of certain exhibits. <(53)> This amendment raises the threshold from that suggested in the Proposing Release, which simply retained the threshold found in Form SR. The Commission solicited comment on raising the threshold. <(54)> 15 U.S.C. 78l. In 1994, the Commission amended its rules to permit a Form 8-A filed with respect to a class of debt securities to be listed on a national securities exchange to become effective simultaneously with the effectiveness of the Securities Act registration statement pertaining to such debt securities. See Release No. 34-34922 (Nov. 1, 1994) [59 FR 55342]. The amendments to Rule 12d1-2 adopted today clarify the automatic effectiveness procedure applicable to debt securities. <(55)> 17 CFR 229.202. The Commission has amended Form 8-A to require a description of the registrant's securities pursuant to Item 202 of Regulation S-B [17 CFR 228.202] for small business issuers that use Form 8-A. ======END OF PAGE 10====== <(56)> Consistent with current staff practice, an issuer registering an initial public offering will be permitted to use Form 8-A even though it will not be subject to reporting until after the effectiveness of that Securities Act registration statement. Currently, a Form 8-A that is filed to register debt securities is effective automatically. The Commission has determined that there is no reason to differentiate in this respect between debt and equity securities. Staff review of these filings is redundant, given that the Form largely incorporates by reference information contained in other Commission filings that are subject to staff review. Because the quality of the disclosure available to the public will not be compromised, the Commission is adopting amendments today to make all registration statements filed on Form 8-A effective automatically. <(57)> <(56)> Form 8-A registration statements may incorporate by reference information that is contained in other filings made with the Commission. <(57)> See amendments to Rule 12d1-2. Acceleration requests will no longer be required for Forms 8-A, and no effectiveness orders will be issued with respect to such Forms. A Form 8-A filed to register a class of securities under Section 12(b) will become effective upon the later of the filing of the Form 8-A, the Commission's receipt of certification from the national securities exchange, or (if the class of securities is concurrently being registered under the Securities Act) the effectiveness of the related Securities Act registration statement. With respect to a class of securities registered under Section 12(g) of the Exchange Act, the Form 8-A will become effective upon filing, or if the class of securities is concurrently being registered under the Securities Act, the effectiveness of the related Securities Act registration statement, whichever is later. Filers will check the cover page of the Form indicating whether registration is sought under Section 12(b) or 12(g), and also will use the appropriate EDGAR form type. ======END OF PAGE 11====== In addition, after soliciting comments from the national securities exchanges and considering the responses received, the Commission has determined that the copy of Form 8-A filed with each relevant national securities exchange need no longer contain certain exhibits because issuers must provide the same information as part of the listing application to the national securities exchanges. As a result, the Commission is eliminating the requirement to file these exhibits with the exchanges. <(58)> The amendments adopted today will render the Form 8-A merely a notice of Section 12 registration that becomes effective automatically. The Commission has determined that the Form better serves its purpose as a notice if the Commission is notified separately of each national securities exchange on which a class of securities is registered. As a result, if an issuer is registering a class of securities on two or more national securities exchanges, it should file a separate Form 8-A for each exchange listing. As noted above, the Commission has deferred action on its proposal to permit concurrent Securities Act and Exchange Act registration without the filing of Form 8-A. The Commission will continue to review Exchange Act registration and the circumstances in which Form 8-A is filed in the context of its ongoing efforts to streamline the registration process. C. Form 8-B <(58)> These exhibits include, for example, copies of the last annual report filed pursuant to Sections 13 or 15(d) of the Exchange Act, copies of the latest definitive proxy statement filed with the Commission, and copies of the issuer's charter and by-laws. Accordingly, the exhibits are already publicly available. ======END OF PAGE 12====== The Commission has determined that Exchange Act Form 8-B, the registration statement for certain successor issuers, is of limited usefulness. Most successor issuers do not need to file a new registration statement, since they come within the purview of Rule 12g-3. Under this Rule, successor issuers automatically inherit the Exchange Act reporting obligations of their predecessors, and file a Form 8-K to note the succession. As amended today, Rule 12g-3 will address all situations in which an issuer succeeds to an Exchange Act registered issuer, so that successor issuers will no longer need to file Form 8-B. Adopted in 1936, Form 8-B is used by an issuer to register its securities when the issuer has no securities registered under Section 12 of the Exchange Act, but has succeeded to an issuer that has securities registered under Section 12 at the time of the succession. <(59)> In order to simplify the registration requirements for successor issuers and eliminate interpretive questions about this little-used Form, the Commission is rescinding Form 8-B today. <(60)> The Commission is adopting amendments to Rule 12g-3 to include any transactions or securities that were previously covered by Form 8-B, but not by Rule 12g-3. Pursuant to Rule 12g-3, the equity securities of a non- <(59)> 15 U.S.C. 78l. "Succession" is defined in Exchange Act Rule 12b-2 [17 CFR 240.12b-2]. In the fiscal years 1995 and 1996, the Commission received only 57 and 58 Form 8-B filings, respectively. <(60)> The Commission also is adopting certain technical amendments to account for the elimination of Form 8-B. Conforming language changes are adopted with respect to Rule 13a-1 of the Exchange Act, and Rule 13a-2 of the Exchange Act is eliminated. The Commission is adopting amendments to Rule 12g-3 to incorporate the substance of these Rules. ======END OF PAGE 13====== reporting issuer that succeeds an issuer with equity securities registered under Section 12 are automatically deemed to be registered under Section 12 if the succession occurred by means of merger, consolidation, exchange of securities or acquisition of assets. Rule 12g-3 is now being amended to include other transactions, such as the succession of a non-reporting issuer to more than one reporting issuer, either through consolidation into a new entity or a holding company formation. Currently, in this type of succession, both existing issuers must deregister their securities under the Exchange Act, and the successor must file a Form 8-B. As a result of the amendments adopted today, the securities of the successor issuer will be deemed automatically registered under Section 12 of the Exchange Act. If the classes of securities issued by each of the predecessor issuers are registered under the same paragraph of Section 12, <(61)> the class of securities issued by the successor issuer will be deemed registered under the same paragraph of Section 12. If the classes of securities issued by the predecessor issuers each are registered under different paragraphs of Section 12, then the class of securities issued by the successor issuer will be deemed registered under Section 12(g). Consistent with prior practice, the successor issuer will file a Form 8-K <(61)> A class of securities listed on a national securities exchange must be registered under Section 12(b) [15 U.S.C. 78l(b)]. An issuer with total assets of $10 million or more and a class of equity securities held by at least 500 shareholders of record must register such class of securities pursuant to Section 12(g) [15 U.S.C. 78l(g)]. See also Rule 12g-1 [17 CFR 240.12g- 1]. ======END OF PAGE 14====== with respect to the succession transaction and subsequently comply with all of the applicable provisions of the Exchange Act. <(62)> In the situation where the classes of securities issued by the predecessor issuers each are registered under different paragraphs of Section 12, the Commission initially had proposed that the successor issuer would be able to elect the Section 12 paragraph under which it would be deemed registered. However, upon further consideration, the Commission has determined that deeming successor issuers to be registered under Section 12(g) would be preferable in case an issuer is late in filing its Form 8-K and designating the paragraph of Section 12 under which its securities should be deemed registered. If the successor decides to list its securities on a national securities exchange, it will register its securities under Section 12(b) by filing a Form 8-A, which has been streamlined into a simplified notice that will be automatically effective as a result of the amendments adopted today. In addition to these changes, the Commission is amending Rule 12g-3 to clarify that it applies to issuers with securities registered under Section 12(b) of the Exchange Act, <(63)> as well as to those with securities <(62)> Items 1 and 2 of Form 8-K [17 CFR 249.308]. <(63)> Under Rule 12g-3 as amended, the securities of a successor to an issuer whose securities are registered under Section 12(b) also will be deemed registered under Section 12(b) and listed on the same national securities exchange. However, the exchange may deregister the securities by filing a Form 25 [17 CFR 249.25] if that is not the case. By operation of Rule 12g-2 [17 CFR 240.12g-2], the securities of the successor issuer will automatically be deemed registered under Section 12(g) of the Exchange Act. ======END OF PAGE 15====== registered under Section 12(g). <(64)> Rule 12g-3 also is being amended to apply to any class of securities, whether exchange-listed, required to be registered under Section 12(g) of the Exchange Act, or voluntarily registered under Section 12(g) of the Exchange Act. <(65)> Consistent with some of the amendments being adopted with respect to Rule 12g-3, the Commission is adopting amendments to Exchange Act Rule 15d-5, which pertains to the automatic assumption of reporting obligations by a non-reporting issuer that succeeds to an issuer that has reporting obligations under Section 15(d) of the Exchange Act. <(66)> In connection with a succession by merger, consolidation, exchange of securities or acquisition of assets, Rule 15d-5 automatically transfers the <(64)> 15 U.S.C. 78l(g). The securities of a successor to an issuer whose securities are registered under Section 12(g) also will be deemed registered under Section 12(g). A successor issuer who wishes to list its securities on a national securities exchange will file a Form 8-A to register the securities under Section 12(b). The Commission also is adopting technical amendments to Rule 12g-3 to accommodate the elimination of Form 8-B. Rule 12g- 3 is being amended to incorporate the annual report requirements of Rule 13a-2 and the relevant portions of Rule 13a-1, both of which contain references to Form 8-B. <(65)> Section 12(g) of the Exchange Act only requires the registration of equity securities. It is conceivable that Rule 12g-3 as amended could impose reporting obligations on a limited class of issuers not currently subjected by Rule 12g-3 to reporting following a succession because the predecessor issuer had a class of securities registered under Section 12 voluntarily. However, the amendment should not impose any undue burdens as a result of this situation because such an issuer will be able to terminate the registration under Section 12 immediately following the succession. <(66)> 15 U.S.C. 78o(d). ======END OF PAGE 16====== Section 15(d) reporting obligations of a predecessor issuer to equity securities issued by a non-reporting successor issuer in connection with the succession. As amended, Rule 15d-5 covers all securities issued by a non-reporting issuer, not just equity securities. III. REGISTRATION REQUIREMENTS A. Registration Requirements For American Depositary Receipts The Commission is eliminating the registration requirement under Section 12(b) of the Exchange Act for ADRs <(67)> registered on Form F-6 <(68)> under the Securities Act. This will eliminate the current disparate treatment of ADRs that are listed on a national securities exchange, which must be registered under Section 12(b) of the Exchange Act, compared to ADRs that are traded on the Nasdaq stock market, which need not be registered under Section 12(g) of the Exchange Act. <(69)> The Commission is adopting Rule 12a-8 <(70)> under <(67)> An American depositary share ("ADS") is the security that represents an ownership interest in deposited securities, and an ADR is the physical certificate that evidences ADSs. Because market participants do not appear to distinguish between ADRs and ADSs, the term "ADR" is used in this Release to refer to either the physical certificate or the security evidenced by such certificate. <(68)> When an ADR facility is created by a Depositary, the Depositary files a Form F-6 to register the ADRs that will be issued from the facility. The transaction of offer and sale covered by the registration statement on Form F-6 is the deposit of securities into the facility. The securities so deposited must be separately registered or must be exempt from registration under the Securities Act. <(69)> A foreign issuer whose ADRs trade on Nasdaq must register the common stock underlying the ADRs under Section 12(g) of the Exchange Act. ======END OF PAGE 17====== the Exchange Act to exempt ADRs registered on Form F-6 from the registration requirements of Section 12(b). The Section 12(b) registration requirements, however, will continue to apply to the class of securities underlying the ADRs. Exempting ADRs from Section 12(b) registration is consistent with the Commission's view of ADRs as separate securities that provide a mechanism for investing in the underlying securities, <(71)> and will result in the equal treatment of listed and unlisted ADRs. Moreover, eliminating the Section 12(b) registration requirement for ADRs will eliminate unintentional technical violations of the Exchange Act by issuers that register the underlying shares, but neglect to register the ADRs under Section 12(b) by listing the ADRs on the cover page of the Exchange Act registration statement. As a matter of common practice in Section 12(g) registration statements, issuers provide disclosure with respect to the ADRs even though the ADRs themselves are not being registered. Although it is likely that issuers would follow the same practice regardless of the elimination of <(70)>(...continued) <(70)> Rule 12a-8 refers to the registration requirements of Section 12(a) of the Exchange Act, which is technically correct, rather than Section 12(b), which contains the listing application requirements for securities registered on a national securities exchange. However, registration under Section 12(a) is commonly referred to as Section 12(b) registration. <(71)> This view of ADRs as a means of investing in the underlying securities is consistent with the way that ADRs are treated for reporting purposes by institutional investment managers under Section 13(f) of the Exchange Act [15 U.S.C. 78m(f)]. The shares of a foreign issuer that are held through ADRs, as well as the shares of such issuer held directly, are reported pursuant to Section 13(f) and Rule 13f-1 [17 CFR 240.13f-1]. ======END OF PAGE 18====== Section 12(b) registration for ADRs, the Commission has, upon further consideration, decided to adopt technical amendments to Form 20-F and Form 10 to ensure that issuers continue to provide disclosure about ADRs in their Exchange Act registration statements. <(72)> Because the actual disclosure provided to investors will not be affected by the elimination of Section 12(b) registration, the elimination of such registration requirements should not compromise investor protection. <(73)> B. Securities Act Form Eligibility The Commission is adopting amendments to Rule 401(c) under the Securities Act to permit an issuer to switch to a shorter Securities Act form at the time of filing any amendment if it has become eligible to use the shorter form since filing its initial registration statement. These amendments should ease filing burdens on issuers without affecting the quality of the disclosure available to investors. Currently, the form and content of a registration statement and prospectus are determined on the initial filing date. An issuer is not permitted to reevaluate its status until it files a post-effective <(72)> Item 14(c) of Form 20-F and Item 11 of Form 10. <(73)> The Commission also is adopting a technical amendment to Rule 15d-3 of the Exchange Act. Although ADRs are no longer subject to registration under the Exchange Act, a reporting obligation may arise with respect to such securities under Section 15(d). Rule 15d-3 previously suspended such reporting obligation if the depositary complied with former Item 4(a) of Form F-6. Because former Item 4(a) no longer exists, see Release No. 33-7300, the Commission is adopting amendments to Rule 15d-3 to clarify that reporting obligations are suspended for all ADRs registered on Form F-6. ======END OF PAGE 19====== amendment pursuant to Section 10(a)(3) <(74)> of the Securities Act. As amended, Rule 401(c) will permit issuers to determine the appropriate form upon filing any amendment, including pre-effective and post-effective amendments. To ensure that the amendment does not impose new burdens on issuers, the Rule provides that if an issuer files an amendment other than for the purposes of Section 10(a)(3), an issuer is not required to use a form that is different from the one used for its last Section 10(a)(3) amendment, or if none has been filed, its initial registration statement. C. Rule 424(d) -- Radio and Television Broadcast Prospectuses Today, the Commission is adopting amendments to Rule 424(d) to eliminate the special filing requirements for radio and television broadcast prospectuses. <(75)> The Commission has determined that the previous requirement that such prospectuses be filed at least five days before they were broadcast or otherwise issued to the public was not necessary for investor protection. This is especially true in light of the increasing use of electronic media in securities offerings. <(76)> As amended, Rule 424(d) still requires that radio and television broadcast prospectuses be reduced to writing, but such prospectuses will be filed with the Commission according to the requirements applicable to other types <(74)> 15 U.S.C. 77j(a)(3). <(75)> Under Section 10(f) of the Securities Act [15 U.S.C. 77j(f)], the Commission is granted the authority to require radio and television broadcast prospectuses to be filed along with other forms of prospectuses used in connection with the sale of the registered securities. <(76)> The amendments adopted today are consistent with the positions set forth in Securities Act Release No. 33- 7233 (October 6, 1995)[60 FR 53458] concerning the use of electronic media for delivery purposes. ======END OF PAGE 20====== of prospectuses. As a result of the amendments adopted today, radio and television broadcast prospectuses must be filed according to the timing specified in Rule 424 (between two to five days after use depending on the subject matter of the prospectus). <(77)> D. Exhibits The Commission is adopting Rule 462(d) to permit automatic effectiveness of a post-effective amendment filed solely to add an exhibit, where the exhibit will not affect the disclosure in the prospectus. Adoption of this Rule will eliminate an unnecessary difference in the treatment of issuers that file on Forms S-3/F-3 and all other issuers. Currently, issuers that file on Forms S-3/F-3 can file updated exhibits post-effectively on Form 8-K, which are then automatically incorporated by reference into their prospectuses. However, registrants not filing on Form S-3/F-3 can only file updated exhibits by filing post-effective amendments, which are subject to possible staff review. Even if such amendments are not selected for review, registrants face possible delay between the time the amendments are filed and when they are declared effective. The Commission has determined that automatic effectiveness of certain exhibits is appropriate because staff review before effectiveness is unnecessary, given the generally routine nature of these filings. Rule 462(d) also would be available to foreign governmental issuers that register debt securities on Schedule B using shelf registration procedures. <(78)> <(77)> Comparable amendments also are being adopted to Rule 497(f), which pertains to the radio and television broadcast prospectuses of investment companies. <(78)> Release Nos. 33-6240 (September 10, 1980) [45 FR 61609] and 33-6424 (September 2, 1982) [47 FR 39809]. ======END OF PAGE 21====== An issuer will check a box on the cover page of its post-effective amendment to indicate that automatic effectiveness is requested. <(79)> Exhibits that may be filed through this procedure include consents of experts and counsel, and other exhibits that generally would not require revisions to the disclosure in the prospectus. The Rule adopted today is not intended to affect an issuer's disclosure obligations. Rule 462(d) cannot be used to file exhibits that would trigger the filing of a post-effective amendment to update the prospectus. The Rule also does not permit automatic effectiveness for post-effective amendments that include an exhibit that otherwise should have been filed pre-effectively. In either case, the issuer may not check the box for automatic effectiveness. IV. CERTAIN FINDINGS Section 23(a) of the Exchange Act <(80)> requires the Commission to consider the anti-competitive effects of any rules it adopts thereunder, if any, and the reasons for its determination that any burden on competition imposed by such rules is necessary or appropriate to further the purposes of the Exchange Act. Furthermore, Section 2 of the Securities Act <(81)> and Section 3 of the Exchange Act, <(82)> as amended <(79)> Forms SB-1, SB-2, S-1/F-1, S-2/F-2, S-4/F-4, and S-11 have been amended to include a new check box on the cover page that will permit automatic effectiveness for certain exhibits that have been filed post-effectively. In addition to checking the box, filers should use a new EDGAR form type: POS EX instead of POS AM. Schedule B filers should simply place a checked box on the facing page of the amendment to indicate that automatic effectiveness is requested. <(80)> 15 U.S.C. 78w(a). <(81)> 15 U.S.C. 77b. ======END OF PAGE 22====== by the recently enacted National Securities Markets Improvement Act of 1996, <(83)> provide that whenever the Commission is engaged in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission also shall consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. The Commission has considered the amendments discussed in this release in light of the comments received in response to the Proposing Release and the standards in Section 23(a) of the Exchange Act. Because the amendments do not effect any substantive change in the information that would be disclosed by issuers, they do not have any anti-competitive effects. Furthermore, the amendments eliminate unnecessary disclosure requirements and streamline the disclosure process, thereby promoting efficiency, competition and capital formation. V. COST-BENEFIT ANALYSIS The amendments adopted in this release represent the second phase of the Commission's consideration of the recommendations of the Task Force on Disclosure Simplification. The Task Force undertook to review Commission rules and forms with the goal of simplifying and modernizing disclosure and filing requirements to reduce the costs of capital raising, without compromising investor protection. The Commission sought and considered input from interested parties on how to simplify the registration and reporting process, and the rule and form changes in this release were developed from those comments. <(82)>(...continued) <(82)> 15 U.S.C. 78c. <(83)> Pub. L. No. 104-290, 106, 110 Stat. 3416 (1996). ======END OF PAGE 23====== Most of the commenters indicated that the proposed form and rule changes would streamline and simplify the disclosure process. Because the purpose of the form and rule changes adopted is to eliminate unnecessary requirements, such changes will reduce the overall costs and burdens associated with filing requirements generally. Form SR. The elimination of Form SR and the amendments to require use of proceeds disclosure instead in Exchange Act periodic reports will reduce the number of filings made by issuers, and therefore should ease reporting burdens. The changes may, however, increase reporting frequency for issuers. Currently, issuers file use of proceeds disclosure on Form SR semi-annually, and in 1996 1,654 Form SRs were filed. As noted in the Proposing Release, it is estimated that approximately 1,470 quarterly reports on Form 10-Q and 490 annual reports on Form 10-K that include the use of proceeds information would be filed each year. It is estimated that 795 quarterly reports on Form 10-QSB and 265 annual reports on Form 10-KSB that include the use of proceeds disclosure would be filed by small business issuers each year. Because issuers are otherwise required to prepare Exchange Act reports and would no longer have to prepare a separate form, any burden resulting from the transfer of the use of proceeds disclosure into the Exchange Act reports is expected to be minimal. Further, to offset the potential increase in reporting frequency, the amendments increase the threshold that triggers the use of proceeds disclosure (from the lesser of 5% of the total offering proceeds or $50,000 to the lesser of 5% or $100,000). This change should reduce somewhat the burden on reporting issuers by limiting the circumstances in which disclosure is required. ======END OF PAGE 24====== In addition, it is expected that the information on use of proceeds will be received in a more timely fashion (every three months instead of every six months after the first report), and will be more accessible to investors. This information regarding the progress of the offering is useful to investors and Exchange Act reports are more commonly monitored by investors. These benefits should outweigh any increase in reporting burdens from the increased frequency of disclosures. Form 8-B. Form 8-B is being eliminated because of its limited usefulness. Most issuer successions are now covered by Rule 12g-3 and that Rule is being expanded to cover all situations that formerly triggered the filing of Form 8-B. In 1996, 58 Form 8-B filings were made. The rule changes will eliminate a registration burden on successor issuers, without reducing investor protection, and eliminate interpretive questions about this infrequently used Form. ADRs. The Exchange Act registration requirement for ADRs listed on a national securities exchange is being rescinded to eliminate a disparity in the registration requirements applicable to listed and non-listed ADRs. As a result, issuers will no longer be required to list the ADRs that are to be traded on a national securities exchange on the cover page of the Exchange Act registration statement. This will eliminate unintentional technical violations by issuers who register the underlying class of securities, but do not include the ADRs on the cover page. Short Form Registration Statements. Rule 401(c) under the Securities Act is being amended to permit issuers to file an amendment on a shorter Securities Act form than was used in its initial registration statement whenever the issuer is eligible to use a shorter form. This should reduce ======END OF PAGE 25====== filing burdens and printing costs by enabling issuers to use a shorter form when filing amendments. Form 8-A. The amendments to make Form 8-A filings covering equity securities automatically effective should reduce the uncertainty to issuers of possible pre-effective staff review and resultant delays. Since the Form largely incorporates by reference information in other filings already subject to staff review, issuers will benefit from the reduction in uncertainty and redundant disclosure requirements, without harm to investors. The amendments also eliminate the requirement to file with the national exchanges certain exhibits on Form 8-A that already are publicly available. This change will reduce costs associated with duplicative filing requirements. VI. SUMMARY OF FINAL REGULATORY FLEXIBILITY ANALYSIS A Final Regulatory Flexibility Analysis ("FRFA") has been prepared in accordance with 5 U.S.C. 604 that relates to the rescinding of Form SR under the Securities Act, Form 8-B and Rule 13a-2 under the Exchange Act; the addition of Rule 12a-8 under the Exchange Act; and the other amendments to disclosure requirements under the Securities Act and Exchange Act. As discussed more fully in the FRFA, the Commission's rescinding of form and rule requirements and its adoption of other amendments to simplify and streamline disclosure requirements will affect small entities, as defined by the Commission's rules, but only in the same manner as other entities. The Commission is aware of approximately 1100 Exchange Act reporting companies that currently have assets of $5 million or less. There is no reliable way of determining how many small businesses may ======END OF PAGE 26====== become subject to Commission reporting obligations in the future, or may otherwise by affected by the rule proposals. The FRFA notes that alternatives for providing different means of compliance for small entities or for exempting small entities from the amendments would be inconsistent with the Commission's statutory mandate of investor protection. The amendments are intended to simplify disclosure obligations for all issuers, irrespective of size, such that further distinctions between companies based on size would not be appropriate. The Commission received no comments on the Initial Regulatory Flexibility Analysis ("IRFA") prepared in connection with the Proposing Release, and no comment letters specifically addressed to the IRFA. A complete copy of the FRFA is available in Public File No. S7-15-96. VII. PAPERWORK REDUCTION ACT As set forth in the Proposing Release, Forms 20-F, 10-Q, 10-QSB, 10-K, 10-KSB and 8-A contain collections of information within the meaning of the Paperwork Reduction Act of 1995 ("PRA"). <(84)> The collection of information requirements contained in these forms were submitted to OMB for review and were approved by OMB. These information collections display an OMB control number and expiration date. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the agency displays a valid OMB control number. The Commission is deferring consideration of its proposal to permit concurrent registration of a public offering under the Securities Act and a class of securities under the Exchange Act by filing a single form. As a result, the changes to the Form 8-A information collection will be adopted <(84)> 44 U.S.C. 3501 et seq.. ======END OF PAGE 27====== that differ from the proposed changes to that information collection. The total annual burdens associated with Form 8-A will not decrease as much as anticipated under the Proposing Release. The descriptions and estimated burdens for the other collection of information requirements have not changed, and are set forth in the Proposing Release. VIII. STATUTORY BASIS FOR THE AMENDMENTS The foregoing amendments are adopted pursuant to Sections 6, 7, 8, 10 and 19(a) of the Securities Act, Sections 3, 12, 13, 15, 23, 35A and 36 of the Exchange Act, and Sections 8, 24, 38 and 54 of the Investment Company Act of 1940. List of Subjects 17 CFR Parts 228, 229, 230, 232, 239, 240 and 249 Reporting and recordkeeping requirements, Securities. ======END OF PAGE 28======