Abstract
The US Securities and Exchange Commission (SEC) has recently adopted new and amended rules, effective as of 4th June, 2007, which make it considerably easier for non-US companies, which the SEC refers to as foreign private issuers or FPIs, to terminate the registration of their equity securities under the US Securities Exchange Act (Exchange Act) and thereby free themselves from the time and expense of complying with the Exchange Act's periodic reporting obligations, including the burdens imposed by the US Sarbanes–Oxley Act of 2002. In this paper, we explain the new and amended rules. We then address a number of factors that an FPI satisfying the new rules should consider before deciding whether to go through the SEC's exit door, including pending SEC actions intended to benefit FPIs and the effect of deregistration on the FPI's valuation and cost of capital. Finally, we explain the mechanics of the US deregistration process.
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