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The Securities and Exchange Commission said Monday it plans to vote Dec. 14 on whether to introduce draft rules making it easier for foreign companies to delist from U.S. stock exchanges. The move is in response to lobbying by European trade associations, including the Confederation of Swedish Enterprise, the Confederation of British Industry and nine other international business groups, which wrote a letter to former SEC Chairman William Donaldson in February pressing for a change in securities law. Under the current rule, which dates to the 1960s, foreign companies wishing to remove their securities from U.S. stock exchanges must have fewer than 300 U.S. shareholders. The SEC may consider raising the number of U.S. shareholders a corporation could have to leave an exchange or letting a company de-register if its trading volume in the U.S. is less than 5 percent of its worldwide trading volume during its most recent fiscal year. Under another approach the agency is weighing, foreign companies could delist if the percentage of shares held by investors in the U.S. fell below a certain threshold. For example, if a company had 100 million shares outstanding and U.S. investors held only 500 of those shares, the company could delist. Roughly 1,200 foreign companies are listed on U.S. exchanges. The New York Stock Exchange has 400 foreign issuers, Nasdaq has roughly 300, and the rest trade on over-the-counter exchanges. European trade organizations complain that many foreign companies listed on U.S. exchanges wish to exit the markets because of the higher cost and administrative burden of complying with the Sarbanes-Oxley Act, which was adopted in 2001 to fight corporate fraud. The difficulty of delisting, combined with improved liquidity on European markets in recent years, is also deterring overseas companies from registering in the U.S., they argue. The Office of International Corporate Finance is expected to propose the rule on Dec. 14, which a majority of commissioners is expected to approve. The agency would then solicit comments on the proposal for 30 to 45 days before voting to adopt it. Copyright �2005 TDD, LLC. All rights reserved.

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