Countdown To The Elimination Of U.S. GAAP Reconciliation Requirements For Foreign Private Issuers

On March 4, 2008, the United States Securities and Exchange Commission's (the "SEC") amendments to current rules and forms that will allow foreign private issuers to file their financial statements without reconciliation to U.S. generally accepted accounting principles ("U.S. GAAP"), as currently required, will become effective. As an alternative, once the amendments are effective, foreign private issuers (generally, non-U.S. domiciled entities with a majority of their shareholders and other operations located outside the U.S.) will be able to include in their SEC filings financial statements that are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

In adopting these new rules, the SEC once again demonstrated its commitment to two initiatives that have received so much of that agency's attention over the last year. First, the SEC reiterated its desire to encourage the development of a single set of high-quality, globally accepted accounting standards. Second and as follow-up to some of the SEC's other recently adopted amendments, including the amendments regarding deregistration for foreign private issuers and the revisions to Rule 144, the SEC once again proved its resolve to enhance the attractiveness of the U.S. capital markets to foreign private issuers.

Previous SEC Requirements Concerning U.S. GAAP Reconciliation

Under the previous rules and regulations, any foreign private issuer that registered its securities with the SEC and that is obligated to file periodic reports under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), was required to either prepare its financial statements in accordance with U.S. GAAP or provide a U.S. GAAP reconciliation for those statements. The required reconciliation generally included a narrative description of differences and a quantitative reconciliation of specific line items in the financial statements, including net income, major balance sheet captions and cash flow.

The additional expense and time involved in preparing these reconciliations and auditing these additional financial reports had long been cited as a significant obstacle for a foreign private issuer contemplating a listing in the United States.

Amendments Eliminating the Need for U.S. GAAP Reconciliation

Under the amended rules, a foreign private issuer who files a Form 20-F (the general form on...

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