The Securities and Exchange Commission voted Wednesday to modernize the disclosure requirements for foreign companies selling stock in U.S. markets, in an effort to give American investors instant electronic access to disclosure documents of foreign companies, in English.
“[The] goal that is achieved in the new rules is to fully protect investors without unduly burdening foreign private issuers” states the SEC’s Division of Corporation Finance, John White.
There are three rule amendments
Apart from revising the annual report and registration statement forms used by public foreign companies, the SEC will require disclosure of any disagreements with the certifying accountant over the annual reports and registration statements. The commission will also shorten the deadline in which the companies can file annual reports, from six months to four.
This will give investors access to more information sooner.
Provided the companies meet certain criteria, they will be exempt from registering their equity securities under Section 12(g) before having their stock traded in the U.S. over-the-counter market. Before, public foreign companies had to register their equity securities under Section 12(g) if certain information about the securities was published outside of the U.S.
The SEC will increase cross-border exemptions for business combination transactions, tender offers, and rights offerings, which is expected to allow U.S. security holders to buy and sell stock on the same terms as other security holders.