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SEC Adopts New Rules under which Foreign Private Issuers Can Cease to be SEC Reporting Companies
March 30, 2007
Foreign private issuers that find the cost of SEC registration outweighs the benefits of a U.S. listing or are considering accessing the U.S. public markets but are concerned that "once in, they may not be able to get out," will now be able to rely on a set of exit provisions that are easier to satisfy should they wish to terminate their SEC reporting obligations. After proposing a new exit regime in December 2005, and re-proposing a substantially revised regime a year later, the SEC has finally adopted new Exchange Act Rule 12h-6, which permits a foreign private issuer meeting specified conditions to terminate its Exchange Act registration and reporting obligations. The SEC has also modified Rule 12g3-2(b) so as to permit foreign private issuers to benefit from the exemption thereunder immediately upon the effectiveness of termination of reporting obligations pursuant to Rule 12h-6.