Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 12g3-2 -- Exemptions for American Depositary Receipts and Certain Foreign Securities

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1. Securities of any class issued by any foreign private issuer shall be exempt from section 12(g) of the Act if the class has fewer than 300 holders resident in the United States. This exemption shall continue until the next fiscal year end at which the issuer has a class of equity securities held by 300 or more persons resident in the United States. For the purpose of determining whether a security is exempt pursuant to this paragraph:
   
   
   1. Securities held of record by persons resident in the United States shall be determined as provided in Rule 12g5-1 except that securities held of record by a broker, dealer, bank or nominee for any of them for the accounts of customers resident in the United States shall be counted as held in the United States by the number of separate accounts for which the securities are held. The issuer may rely in good faith on information as to the number of such separate accounts supplied by all owners of the class of its securities which are brokers, dealers, or banks or a nominee for any of them.
      
      
   2. Persons in the United States who hold the security only through a Canadian Retirement Account (as that term is defined in Rule 237(a)(2) under the Securities Act of 1933, shall not be counted as holders resident in the United States.
      
      
2. 
   
   
   1. Securities of any foreign private issuer shall be exempt from section 12(g) of the Act if the issuer, or a government official or agency of the country of the issuer's domicile or in which it is incorporated or organized:
      
      
      1. Shall furnish to the Commission whatever information in each of the following categories the issuer since the beginning of its last fiscal year
         
         
         1. has made or is required to make public pursuant to the law of the country of its domicile or in which it is incorporated or organized,
            
            
         2. has filed or is required to file with a stock exchange on which its securities are traded and which was made public by such exchange, or
            
            
         3. has distributed or is required to distribute to its security holders;
            
            
      2. Shall furnish to the Commission a list identifying the information referred to in paragraph (b)(1)(i) of this section and stating when and by whom it is required to be made public, filed with any such exchange, or distributed to security holders;
         
         
      3. Shall furnish to the Commission, during each subsequent fiscal year, whatever information is made public as described in (A), (B) or (C) of paragraph (b)(1)(i) of this section promptly after such information is made or required to be made public as described therein;
         
         
      4. Shall, promptly after the end of any fiscal year in which any changes occur in the kind of information required to be published as referred to in the list furnished under paragraph (b)(1)(ii) of this section or any subsequent list, furnish to the Commission a revised list reflecting such changes; and
         
         
      5. Shall furnish to the Commission in connection with the initial submission the following information to the extent known or which can be obtained without unreasonable effort or expense: the number of holders of each class of equity securities resident in the United States, the amount and percentage of each class of outstanding equity securities held by residents in the United States, the circumstances in which such securities were acquired, and the date and circumstances of the most recent public distribution of securities by the issuer or an affiliate thereof.
         
         
   2. The information required to be furnished under paragraphs (b)(1)(i) and (b)(1)(ii) of this section shall be furnished on or before the date on which a registration statement under section 12(g) of the Act would otherwise be required to be filed. Any issuer furnishing information under paragraph (b)(1)(i) of this section shall notify the Commission that it is furnished under that paragraph.
      
      
   3. The information required to be furnished under this paragraph (b) is information material to an investment decision such as: the financial condition or results of operations; changes in business; acquisitions or dispositions of assets; issuance, redemption or acquisitions of their securities; changes in management or control; the granting of options or the payment of other compensation to directors or officers; and transactions with directors, officers or principal security holders.
      
      
   4. Only one complete copy of any information or document need be furnished under paragraph (b)(1) of this section. Such information and documents need not be under cover of any prescribed form and shall not be deemed to be "filed" with the Commission or otherwise subject to the liabilities of section 18 of the Act. Press releases and all other communications or materials distributed directly to security-holders of each class of securities to which the exemption relates shall be in English. English versions or adequate summaries in English may be furnished in lieu of original English translations. No other documents need be furnished unless the issuer has prepared or caused to be prepared, English translations, versions, or summaries of them. If no English translations, versions, or summaries have been prepared, a brief description in English of any such documents shall be furnished. Information or documents in a language other than English are not required to be furnished. If practicable, the Commission file number shall appear on the information furnished or in an accompanying letter. Any information or document previously sent to the Commission under cover of Form 40-F or Form 6-K need not be furnished under paragraph (b)1 of this section.
      
      
   5. The furnishing of any information or document under paragraph (b) of this rule shall not constitute an admission for any purpose that the issuer is subject to the Act.
      
      
3. Depositary Shares registered on Form F-6, but not the underlying deposited securities, are exempt from section 12(g) of the Act under this paragraph (c).
   
   
4. The exemption provided by paragraph (b) of this rule shall not be available for the following securities:
   
   
   1. Securities of a foreign private issuer that has or has had during the prior eighteen months any securities registered under section 12 of the Act or a reporting obligation (suspended or active) under section 15(d) of the Act (other than arising solely by virtue of the use of Form F-7, F-8, F-9, F-10 or F-80), except as provided by paragraph (e) of this section;
      
      
   2. Securities of a foreign private issuer issued in a transaction (other than a transaction registered on Form F-8, F-9, F-10 or F-80) to acquire by merger, consolidation, exchange of securities or acquisition of assets, another issuer that had securities registered under section 12 of the Act or a reporting obligation (suspended or active) under section 15(d) of the Act, except as provided by paragraph (e) of this section; and
      
      
   3. Securities quoted in an "automated inter-dealer quotation system" or securities represented by American Depositary Receipts so quoted unless all the following conditions are met:
      
      
      1. Such securities were so quoted on October 5, 1983 and have been continuously traded since;
         
         
      2. The issuer is in compliance with the exemption in paragraph (b) on October 5, 1983 and has continuously maintained the exemption since; and
         
         
      3. After January 2, 1986, the issuer is organized under the laws of any country except Canada or a political subdivision thereof.
         
         
5. 
   
   1. A foreign private issuer that has filed a Form 15F (Rule 249.324 of this chapter) pursuant to Rule 240.12h-6 shall receive the exemption provided by paragraph (b) of this section for a class of equity securities immediately upon the effectiveness of the termination of registration of that class of securities under section 12(g) of the Act or the termination of the duty to file reports regarding that class of securities under section 15(d) of the Act, or both.
      
      
   2. Notwithstanding any provision of Rule 240.12g3-2(b), in order to satisfy the conditions of the Rule 240.12g3-2(b) exemption received under this paragraph (e), the issuer shall publish in English the information required under paragraph (b)(1)(iii) of this section on its Internet Web site or through an electronic information delivery system generally available to the public in its primary trading market, rather than furnish that information to the Commission.
      
      
   3. The Rule 240.12g3-2(b) exemption received under this paragraph (e) will remain in effect for as long as the foreign private issuer satisfies the electronic publication condition of paragraph (e)(2) of this section or until the issuer registers a class of securities under section 12 of the Act or incurs reporting obligations under section 15(d) of the Act.
      
      
   4. Notwithstanding the time period specified in Rule 240.12g3-2(d)(1), a foreign private issuer that filed a Form 15F solely with respect to a class of debt securities under section 15(d) of the Act may establish the exemption provided by paragraph (b) of this section for a class of equity securities upon the effectiveness of its termination of reporting regarding the class of debt securities.
      
      

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   Notes to Paragraph (e):
   
   
   1. In order to maintain the Rule 240.12g3-2(b) exemption obtained under this paragraph, at a minimum, a foreign private issuer shall electronically publish English translations of the following documents required to be furnished under paragraph (b)(1)(iii) of this section if in a foreign language:
      
      
      1. Its annual report, including or accompanied by annual financial statements;
         
         
      2. Interim reports that include financial statements;
         
         
      3. Press releases; and
         
         
      4. All other communications and documents distributed directly to security holders of each class of securities to which the exemption relates.
         
         
   2. As used in paragraph (e)(2) of this section, primary trading market has the same meaning as under Rule 240.12h-6(f).
      
      
   3. A foreign private issuer that files a Form 15F regarding a class of equity securities shall disclose in the Form 15F the address of its Internet Web site or that of the electronic information delivery system in its primary trading market on which it will publish the information required under paragraph (b)(1)(iii) of this section. An issuer need not update the Form 15F to reflect a change in that address.
      
      
   4. A foreign private issuer that has filed a Form 15F solely with respect to a class of debt securities may establish the exemption under Rule 240.12g3-2(b) regarding a class of equity securities by submitting an application to the Commission after filing its Form 15F. The issuer must provide in that application the date that it filed its Form 15F as well as the address of its Internet Web site or that of the electronic information delivery system in its primary trading market on which it will publish the information required under paragraph (b)(1)(iii) of this section.
      
      

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6. 
   
   1. A foreign private issuer that, upon application to the Commission and not after filing a Form 15F, has obtained or will obtain the exemption under Rule 240.12g3-2(b), may publish the information required under paragraph (b)(1)(iii) of this section on its Internet Web site or through an electronic information delivery system generally available to the public in its primary trading market, rather than furnish that information to the Commission, as long as it complies with the English translation requirements provided in paragraph (e) of this section.
      
      
   2. Before a foreign private issuer may publish information electronically pursuant to this paragraph, it must provide the Commission with the address of its Internet Web site or that of the electronic information delivery system in its primary trading market in its application for the exemption under Rule 240.12g3-2(b) or in an amendment to that application.
      
      

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