SEC urged to ease European company rules FINANCIAL REPORTING

[FaGal]

COMPANIES INTERNATIONAL/ SEC urged to ease European company rules FINANCIAL REPORTING/

NEW YORK, Financial Times UK via NewsEdge Corporation : Regulators will today be urged to ease the US financial reporting requirements placed on European companies that have limited numbers of US investors.

At a meeting in Brussels, the European Commission said it would press for action from the Securities and Exchange Commission, the chief US financial regulator.

The meeting follows the disclosure in the Financial Times last week that a majority of German companies with US listings would like to withdraw from New York because of the cost and burden of new corporate governance rules.

The European Commission wants the SEC to ease the US reporting requirements on companies that delist from US exchanges. Such companies currently must continue to make filings with the SEC unless their number of US-resident investors falls below 300.

European employer organisations, supported by the European Commission, have put forward three solutions that would ease the reporting requirements on companies that withdraw securities from US exchanges.

A spokesman at the SEC said: We are aware of the issues and are giving them serious consideration.

The first possible solution, and the one that is preferred by the European employer organisations, would exempt a company from US reporting requirements if US trading in its securities was less than 5 per cent of worldwide volume during its fiscal year.

The second solution would be to increase the minimum number of US investors from 300 to 3,000. The third would be to base the minimum number on a percentage of worldwide investors rather than an absolute figure.

The Brussels meeting will be attended by David Wright, director for financial markets at the European Commission, and Ethiopis Tafara, director of the office of international affairs at the SEC.

It is part of a regular dialogue between regulators on financial services issues, and a European Commission spokesman said the agenda included the US reporting obligations placed on European companies that drop their US listings.

The spokesman added: We will be looking for clear signals the US is intending to tackle these issues. We are seeking to put an end to onerous reporting requirements.

The UK Confederation of British Industry said that it hoped the SEC could issue proposals to ease reporting requirements early next year.

Rhian Chilcott, head of the CBI office in Washington, said: "We think that the SEC recognises the necessity to have a route by which companies can escape from the regulatory burden imposed on them.

They are looking at various options. We hope we will see something by the early spring, he said.

The cost of maintaining a US listing has increased as a result of the 2002 Sarbanes-Oxley legislation on corporate governance and accounting. .end (paragraph)<<Financial Times UK -- 11/22/04, p. 24>>