[Federal Register: March 12, 2008 (Volume 73, Number 49)]
[Notices]
[Page 13264-13265]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12mr08-120]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57445; File No. SR-NASDAQ-2007-090]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Granting Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1, To Accept Financial Statements Prepared in Accordance
With International Financial Reporting Standards, as Issued by the
International Accounting Standards Board, for Certain Foreign Private
Issuers, Consistent With Commission Rules
March 6, 2008.
On November 16, 2007, The NASDAQ Stock Market LLC (``Nasdaq'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
allow Nasdaq to accept financial statements prepared in accordance with
International Financial Reporting Standards (``IFRS''), as issued by
the International Accounting Standards Board (``IASB''), for certain
foreign private issuers. Nasdaq filed Amendment No. 1 to the proposed
rule change on February 6, 2008. The proposed rule change was published
for comment in the Federal Register on February 12, 2008.\3\ The
Commission received no comments on the proposal. This order approves
the proposed rule change, as modified by Amendment No. 1, on an
accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 57290 (February 7,
2008), 73 FR 8084.
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The Commission recently amended Form 20-F under the Act and other
rules under the Securities Act of 1933 that eliminate the requirement
for U.S. GAAP reconciliation for foreign private issuers that file
financial statements prepared in accordance with IFRS, as issued by the
IASB, if certain conditions are met.\4\ These changes apply only to
foreign private issuers that file on Form 20-F, regardless of whether
the issuer complies with IFRS as issued by the IASB voluntarily or in
accordance with the requirements of the issuer's home country regulator
or the exchange on which its securities are listed.\5\ A foreign
private issuer will continue to be required to provide a reconciliation
to U.S. GAAP if its financial statements include deviations from IFRS
as issued by the IASB, if it does not state unreservedly and explicitly
that its financial statements are in compliance with IFRS as issued by
the IASB, if the auditor does not opine on compliance with IFRS as
issued by the IASB, or if the auditor's report contains any
qualification relating to compliance with IFRS as issued by the
IASB.\6\ The Commission's rules are applicable to annual financial
statements for financial years ending after November 15, 2007, and to
interim periods within those years, that are contained in filings made
after March 4, 2008.\7\
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\4\ See Securities Exchange Act Release No. 57026 (December 21,
2007), 73 FR 986 (January 4, 2008) (the ``IFRS/IASB Adopting
Release''). See also Securities Exchange Act Release No. 55998 (July
2, 2007), 72 FR 37962 (July 11, 2007) (the ``IFRS/IASB Proposing
Release''). The Commission is also considering whether to allow U.S.
issuers to satisfy their reporting requirements through the
provision of financial statements prepared in accordance with IFRS
instead of U.S. GAAP. See Securities Exchange Act Release No. 56217
(August 7, 2007), 72 FR 45600 (August 14, 2007). This proposed
Nasdaq rule change would be applicable only to foreign private
issuers and would not apply to domestic U.S. companies.
\5\ IFRS/IASB Adopting Release at 992.
\6\ Id. at 993. A foreign private issuer using a jurisdictional
or other variation of IFRS will be able to rely on the amendments if
that issuer also is able to state compliance with both IFRS as
issued by the IASB and a jurisdictional variation of IFRS (and does
so state), and its auditor opines that the financial statements
comply with both IFRS as issued by the IASB and the jurisdictional
variation, as long as the statement relating to the former is
unreserved and explicit. Id.
\7\ Id. at 994.
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To allow foreign private issuers to take full advantage of this
development, Nasdaq has proposed to allow such issuers to evidence
compliance with Nasdaq's listing requirements on the same basis as
permitted by the Commission. In its filing, Nasdaq states that to
require foreign private issuers to provide U.S. GAAP reconciliations to
list on Nasdaq, when they no longer are required to under Commission
rules, may cause such issuers not to list in the U.S., thereby denying
U.S. investors the ability to easily invest in such issuers.
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\8\
In particular, the Commission finds that the proposed rule change is
consistent with section 6(b)(5) of the Act, which requires that an
exchange have rules designed, among other things, to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and
in
[[Page 13265]]
general to protect investors and the public interest. The Commission
believes that modifying Nasdaq's listing requirements, that currently
require U.S. GAAP reconciliation, to reflect the changes made under
Commission rules will ease the burden of compliance on foreign private
issuers desiring to list on Nasdaq. In this regard, the Commission
notes that the changes being made simply allow foreign private issuers
listing on Nasdaq to be able to prepare their financial statements
under the same exact terms and conditions as required under Commission
rules. The Commission further notes that these changes should provide
benefits to both foreign issuers and investors in the U.S. market,
consistent with investor protection and the public interest.\9\
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\8\ In approving this rule change, the Commission notes that it
has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\9\ See IFRA/IASB Adopting Release at 1006 (noting that moving
towards a single set of globally accepted accounting standards will
have positive effects on investors).
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Finally, the Commission finds good cause to approve the proposed
rule change prior to the thirtieth day after the date of publication of
the notice of filing. The Commission notes that approving the proposed
rule change prior to the thirtieth day after the date of publication of
the notice of filing will allow Nasdaq to immediately accept financial
statements prepared in accordance with IFRS, as issued by the IASB, in
accordance with changes recently made by the Commission that became
effective March 4, 2008.\10\ Further, as noted above, no comments were
received on the proposed rule change.
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\10\ See IFRS/IASB Adopting Release.
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It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\11\ that the proposed rule change (SR-NASDAQ-2007-090), as
modified by Amendment No. 1, be, and hereby is, approved on an
accelerated basis.
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\11\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-4851 Filed 3-11-08; 8:45 am]
BILLING CODE 8011-01-P