The U.S. Sarbanes-Oxley Act of 2002: 2004 Update for Non U.S. Issuers cont´d - Corporate Governance

The term "purchase obligations" means an enforceable agreement to purchase goods or services that is binding on the issuer and that specifies key commercial terms (such as quantity and price).⁹³ With the exception of "purchase obligations," the classifications of categories shown in the table are defined by reference to U.S. GAAP. However, an issuer that prepares financial statements in accordance with non-U.S. GAAP should include those items of contractual obligations in the table that are consistent with the classifications used in the GAAP under which its primary financial statements are prepared.⁹⁴

Contingent Liabilities and Commitments
Although it issued proposed rules with respect to disclosure requirements for contingent liabilities and commitments, the SEC declined to adopt final rules. In the meantime, the SEC’s existing guidance on the subject—which suggests a tabular format of specified categories⁹⁵—is controlling.⁹⁶

Standards Relating to Listed Company Audit Committees
Section 301 of the Sarbanes-Oxley Act adds new Section 10A(m) of the Exchange Act. Section 10A(m) charges the SEC with creating rules to prohibit the listing of any security in the United States of an issuer that is not in compliance with certain substantive standards for audit committees. The SEC has adopted final rules under Section 301 as Exchange Act Rule 10A-3. Listed foreign private issuers must be in compliance with Rule 10A-3 by July 31, 2005.⁹⁷

Under Rule 10A-3, audit committee members each have to be a member of the board of directors and otherwise independent.⁹⁸ To be "independent," an audit committee member is barred from accepting any compensatory fees other than in that member’s capacity as a member of the board⁹⁹ and may not be an "affiliated person" of the issuer.¹⁰⁰ The definition of affiliated person includes a person that, directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with the specified person.¹⁰¹ There is, however, a safe harbor for certain non-executive officers and other persons that are 10% or less shareholders of the issuer.¹⁰²

Foreign private issuers are entitled to certain exemptions from the independence prong of Rule 10A-3. For example, the inclusion of a nonmanagement employee representative,¹⁰³ a non-management affiliated person with only observer status,¹⁰⁴ or a non-management governmental representative on the audit committee will not violate the affiliated person prong of the independence test.¹⁰⁵ In addition, issuers involved in an IPO are entitled to certain exemptions during a transitional period following their public offering.¹⁰⁶

Rule 10A-3 also requires that:

the audit committee must be "directly responsible" for the appointment, compensation, oversight and retention of the external auditors, who must report directly to the audit committee;¹⁰⁷
the audit committee must establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls or auditing matters, and for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;¹⁰⁸
the audit committee must have the authority to engage independent counsel and other advisors as it deems necessary to carry out its duties;¹⁰⁹ and
the issuer must provide the audit committee with appropriate funding for payment of external auditors, advisors employed by the audit committee and ordinary administrative expenses of the audit committee.¹¹⁰

These requirements are not intended to conflict with local legal or listing provisions (or requirements under the foreign private issuer’s organizational documents), and instead relate to the allocation of responsibility between the audit committee and the issuer’s management.¹¹¹ Accordingly, the audit committee may recommend or nominate the appointment or compensation of the external auditor to shareholders if these matters are within shareholder competence under local law,¹¹² and it must be granted those responsibilities that the board of directors can legally delegate.¹¹³

Rule 10A-3 contains a general exemption for foreign private issuers that have a statutory board of auditors or statutory auditors established pursuant to home country law or listing requirements, which in turn meet various requirements.¹¹⁴

A foreign private issuer relying on Rule 10A-3’s exemption from independence, or the general exemption noted above, will need to disclose in its annual report its reliance on the exemptions and an assessment of whether this reliance will materially adversely affect the audit committee’s ability to act independently and to satisfy any of the other requirements of Rule 10A-3.¹¹⁵

Audit Committee Financial Expert
Section 407(a) of the Sarbanes-Oxley Act directs the SEC to issue rules requiring an issuer to disclose in its periodic reports whether its audit committee has at least one "financial expert" or if not, why not.

The SEC’s final rules implementing Section 407(a) use the term "audit committee financial expert" instead of "financial expert." The SEC has implemented these rules as new Item 16A of Form 20-F. Item 16A applies to annual reports of foreign private issuers for fiscal years ending on or after July 15, 2003.¹¹⁶

Under Item 16A, a foreign private issuer must disclose in its annual report that the issuer’s board of directors has determined whether or not it has one audit committee financial expert serving on its audit committee, or if not, why not.¹¹⁷ If the issuer has a two-tier board of directors, the supervisory or nonmanagement board would make this determination.¹¹⁸ The issuer must also disclose the name of the audit committee financial expert (if any)¹¹⁹ and, effective as of July 31, 2005, whether that person is "independent" from management.¹²⁰ An issuer’s board of directors must make an affirmative determination whether or not it has at least one audit committee financial expert, and may not simply fail to reach a conclusion.¹²¹

In order to qualify as an audit committee financial expert, the audit committee member must have the following "attributes:"¹²²

an understanding of GAAP;
the ability to assess the general application of GAAP in connection with the accounting for estimates, accruals and reserves;
experience preparing, auditing or analyzing financial statements similar to those of the issuer, or actively supervising others engaged in these activities;
an understanding of internal controls and procedures for financial reporting; and
an understanding of audit committee functions.

In addition, an audit committee financial expert must have gained those attributes through:¹²³

education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor, or experience in similar positions;
experience actively supervising these functions;
experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements; or
other relevant experience.

The term "GAAP" as used in Item 16A refers to the body of GAAP used by the issuer in its primary financial statements.¹²⁴ Accordingly, the audit committee financial expert of a foreign private issuer need only be versed in local GAAP, and not in U.S. GAAP or in reconciliation to U.S. GAAP (although that experience would, of course, be useful).¹²⁵

Item 16A also contains a liability "safe harbor" for the audit committee financial expert, under which:

a person who is determined to be an audit committee financial expert is not deemed to be an "expert" for any purpose, such as Section 11 of the Securities Act; and¹²⁶
the designation of a person as an audit committee financial expert does not impose greater duties, obligations or liabilities on the person than on other audit committee and board members, and does not affect the duties, obligations or liabilities of other audit committee and board members.¹²⁷

Auditor Independence
Title II of the Sarbanes-Oxley Act creates a series of requirements relating to the work of external auditors, grouped under the heading "auditor independence." Title II establishes new Sections 10A(g) through (l) of the Exchange Act. The SEC has implemented Title II by the adoption of amendments to Regulation S-X ("S-X") Rule 2-01, new S-X Rule 2-07, new 1934 Act Rule 10A2, and new Item 16C of Form 20-F. S-X Rules 2-01 and 2-07, and Rule 10A-2, generally took effect on May 6, 2003 (although many of the provisions of these rules have varying transition periods), while Item 16C took effect for annual reports in respect of fiscal years ending after December 15, 2003.¹²⁸

Rule 10A-2 provides generally that it is unlawful for an auditor not to be independent under certain provisions of S-X Rules 2-01 and 2-07. S-X Rules 2-01 and 2-07, in turn, track—and in some cases expand upon—the requirements of Sections 10A(g)-(l), and provide (among other things):

an issuer may not employ a former partner, principal, shareholder or professional employee of an accounting firm in a financial reporting oversight role at the issuer if the individual was a member of the audit engagement team during the one-year period preceding the date audit procedures commenced for the fiscal period that included the date of initial employment of the audit engagement team member by the issuer;¹²⁹
limitations on the non-audit services that an independent auditor may provide;¹³⁰
that an audit partner must not act as the lead audit partner or concurring partner for more than five consecutive years, and must not provide certain other services for more than seven consecutive years;¹³¹
that the audit committee must preapprove the engagement of the auditor to provide audit and nonaudit services to the issuer or its subsidiaries, or for policies or procedures for pre-approval of audit and non-audit services (subject to certain de minimis exceptions);¹³²
that no audit partner may earn compensation based on the partner's procuring engagements with the issuer to provide any services other than audit, review or attest services;¹³³ and
that an auditor must report to the audit committee on (1) all critical accounting policies and practices to be used, (2) all alternative treatments of financial information within GAAP that have been discussed with the issuer's management (as well as the implications of those alternatives and the auditor's preferred
treatment), and (3) all other material written communications between the auditors and management.¹³⁴

Under new Item 16C of Form 20-F, a foreign private issuer must disclose in its annual report:

under the caption "audit fees," aggregate fees billed by the auditor for each of the last two fiscal years for audit services (and services in connection with statutory and regulatory filings);¹³⁵
under the caption "audit-related fees," aggregate fees billed by the auditor for each of the last two fiscal years for certain services "reasonably related" to the audit and review of financial statements, as well as a description of these services;¹³⁶
under the caption "tax fees," aggregate fees billed by the auditor for each of the last two fiscal years for tax services, as well as a description of these services;¹³⁷
under the caption "all other fees," aggregate fees billed by the auditor for each of the last two fiscal years for all other products and services, as well as a description of these services;¹³⁸
the pre-approval policies and procedures of its audit committee for audit and non-audit services;¹³⁹ and
if greater than 50%, the percentage of hours expended on the audit by persons other than full-time permanent employees of the auditor.¹⁴⁰

Improper Influence on the Conduct of Audits
Section 303 of the Sarbanes-Oxley Act directs the SEC to issue rules prohibiting any officer or director of an issuer from taking any action improperly to influence an auditor for the purpose of rendering the issuer’s financial statements materially misleading.

The SEC has adopted 1934 Act Rules 13b2-2(a)-(c), largely tracking the text of Section 303. Rules 13b2-2(a)-(c) took effect on June 27, 2003.¹⁴¹ Among other things, the rules prohibit an officer or director of an issuer, or any other person acting under the direction of an officer or issuer, from taking any action to "coerce, manipulate, mislead or fraudulently influence" an auditor engaged in the performance of an audit or review of financial statements of the issuer that are required to be filed with the SEC if that person knew or should have known that his or her actions, if successful, could result in rendering the issuer’s financial statements materially misleading.¹⁴²

The reach of the new rules is quite broad. The phrase "persons acting under the direction" of an officer or director includes the issuer’s employees (even if they are not under the supervision or control of that officer or director), customers, vendors, and even attorneys or other outside advisors who might be in a position to give out false or misleading information to the auditor.¹⁴³ In addition, the period during which an auditor can be said to be "engaged in the performance of an audit" has been given a wide interpretation by the SEC. It accordingly could encompass not only the professional engagement period but any other time the auditor is called upon to make decisions or judgments regarding the issuer’s financial statements, including, in certain situations, periods prior to and after the retention of the auditor.¹⁴⁴

Rule 13b2-2 also identifies certain types of actions which could cause an issuer’s financial statements to be materially misleading, including improperly influencing an auditor:

to issue or reissue a report on an issuer’s financial statements that is not warranted in the circumstances (due to material violations of generally accepted accounting principles, generally accepted auditing standards, or other professional or regulatory standards);
not to perform audit, review or other procedures required by generally accepted auditing standards or other professional standards;
not to withdraw an issued report; or
not to communicate matters to an issuer’s audit committee.¹⁴⁵

Auditor Record Retention
Section 802 of the Sarbanes-Oxley Act (which amends the U.S. federal criminal code) requires any accountant who conducts an audit of an issuer to maintain all audit or review workpapers for a period of five years from the end of the fiscal period in which the audit or review was concluded. Section 802 also requires the SEC to issue rules relating to the retention of relevant records such as workpapers and other documents that form the basis of the review. In response, the SEC has added new

Rule 2-06 to Regulation S-X. Rule 2-06 took effect on March 3, 2003.¹⁴⁶ Rule 2-06 requires that, for a period of seven years after an accountant concludes an audit or review of an issuer’s financial statements, the accountant must retain records relevant to the audit or review, including workpapers, which:¹⁴⁷

are created, sent or received in connection with the audit or review; and
contain conclusions, opinions, analyses or financial data related to the audit or review.

"Workpapers" for these purposes means documentation of auditing or review procedures applied, evidence obtained, and conclusions reached by the accountant in the audit or review engagement.¹⁴⁸

Rule 2-06 also provides that memoranda, correspondence, communications and other documents and records (including electronic records) must be retained whether they support the auditor’s final conclusions about the audit or review, or contain information that is inconsistent with those conclusions.¹⁴⁹

Material Correcting Adjustments
Section 401(a) of the Sarbanes-Oxley Act adds new Section 13(i) to the Exchange Act. Under Section 13(i), each financial report containing financial statements that is prepared in accordance with (or reconciled to) U.S. GAAP and filed with the SEC must reflect all "material correcting adjustments" that have been identified by an issuer’s auditors. This provision took effect on July 30, 2002, and does not require implementing regulations by the SEC.

The SEC has not provided guidance on the question whether Section 13(i) applies to interim financial statements submitted on Form 6-K. We believe the better view of Section 13(i) is that it applies only to a foreign private issuer’s annual report on Form 20-F, and not to any interim financial statements furnished to the SEC under Form 6-K. Submissions on Form 6-K are not considered "filed" as a technical matter with the SEC, and are not required to be reconciled to U.S. GAAP. In addition, the SEC has interpreted the Section 302 certification requirement—which also refers to reports filed with the SEC—as not applying to Form 6-K submissions.¹⁵⁰ As a practical matter, however, an issuer would likely face concerns under the anti-fraud provisions of the U.S. federal securities laws if it failed to reflect a material correcting adjustment in an interim financial statement furnished on Form 6-K.

Attorney Conduct Rules
Section 307 of the Sarbanes-Oxley Act requires the SEC to issue rules setting forth "minimum standards of professional conduct for attorneys appearing and practicing before the SEC in any way in the representation of issuers." Section 307 also directs the SEC to implement rules requiring an attorney to report "evidence of a material violation of securities law or breach of fiduciary duty or similar violation" by an issuer or its agent to the issuer’s CEO or chief legal counsel, and to report the evidence to the audit committee, another independent board committee, or the board of directors as a whole, if the CEO or chief legal counsel "does not appropriately respond to the evidence." The SEC adopted final rules under Section 307 as new Part 205 Standards of Professional Conduct for Attorneys Appearing and Practicing Before the Commission in the Representation of an Issuer (the "Attorney Conduct Rules").¹⁵¹ The Attorney Conduct Rules take effect on August 5, 2003.

The term "appearing and practicing" before the SEC is broader than it might first appear. It potentially covers any lawyer who transacts business with the SEC, represents an issuer in SEC proceedings, provides advice on the U.S. securities laws regarding any document the attorney "has notice" will be submitted to the SEC (including in the context of preparing documents to be filed), or advises an issuer whether information must be included in or filed with any SEC document.¹⁵² However, the Attorney Conduct Rules contain an exemption for "non-appearing foreign attorneys,"¹⁵³ which is defined as an attorney who (1) is himself or herself admitted to practice law in a jurisdiction outside of the United States and does not hold himself or herself out as practicing U.S. federal or state securities or other laws, and (2) either:

conducts activities that would constitute appearing and practicing before the SEC only incidentally to, and in the ordinary course of, the practice of law in a jurisdiction outside the United States; or
is appearing and practicing before the SEC only in consultation with counsel, other than a non-appearing foreign attorney, admitted or licensed to practice in a state or other United States jurisdiction.¹⁵⁴

If a covered attorney becomes aware of evidence of a "material violation"— which is defined to include a material violation of U.S. securities law or a breach of fiduciary duty or a similar material violation of any U.S. federal or state law¹⁵⁵—the Attorney Conduct Rules create a duty to report the matter to the issuer’s chief legal officer ("CLO") or to both the CLO and the CEO.¹⁵⁶ The CLO must then open an inquiry into the matter and take all reasonable steps to cause the issuer to adopt an appropriate response.¹⁵⁷ Unless the attorney reasonably believes that the CLO’s response was adequate, he or she must report the matter "up-the-ladder" to the audit committee, to another independent board committee (if the issuer does not have an audit committee), or the board of directors as a whole (if there is no independent board committee).¹⁵⁸

As an alternative to reporting to the CLO or CEO, the attorney may refer the matter to the issuer’s qualified legal compliance committee ("QLCC"), if one has been set up.¹⁵⁹ A QLCC— which may also be the audit committee—is any committee of the issuer that includes at least one member of the audit committee and two or more non-employee members of the board of directors, and that has been duly established by the board of directors with certain requirements.¹⁶⁰ If the attorney reports the matter to the QLCC, he or she has no further obligations under the Attorney Conduct Rules.¹⁶¹ In addition, the CLO may refer a reported matter to the QLCC in lieu of conducting the required investigation, in which case the QLCC will be responsible for responding.¹⁶²

The SEC has also proposed, but not yet adopted, a "noisy withdrawal" provision, under which a covered attorney would be required to withdraw from representing an issuer under certain circumstances if there is not an appropriate response to the up-the-ladder reporting.¹⁶³ The 60-day comment period for the noisy withdrawal proposal has expired, and the proposal has been the subject of extensive comment by U.S. lawyers.

Code of Ethics
Section 406 of the Sarbanes-Oxley Act directs the SEC to issue rules requiring issuers to disclose whether they have adopted a code of ethics for senior financial officers, or if not, why not. The SEC has accordingly adopted new Item 16B of Form 20-F, which takes effect for annual reports for fiscal years ending on or after July 15, 2003.¹⁶⁴

Item 16B requires the issuer to disclose whether it has adopted a code of ethics that applies to its principal executive officers, principal financial officers, and principal accounting officer or controller (or persons performing similar functions), and if not, it must explain why it has not done so.¹⁶⁵ The term "code of ethics" means written standards that are reasonably designed to deter wrongdoing and to promote a specified set of principles, such as honest and ethical conduct and full, accurate and timely disclosure.¹⁶⁶ The code must be filed as an exhibit to the issuer’s annual report on Form 20-F or posted on the issuer’s website, or the issuer must undertake to provide to any person upon request, free of charge, a copy of the code.¹⁶⁷ An issuer must report any amendment to the code relating to its covered executive officers, as well as the nature and date, and name of the person involved, of any waivers (whether explicit or implicit) of the code for its covered executive officers.¹⁶⁸

Blackout Trading Restrictions
Section 306 of the Sarbanes-Oxley Act prohibits directors and executive officers from acquiring or transferring company equity securities during pension fund "blackout periods." The SEC has adopted new Regulation Blackout Trading Restrictions ("Regulation BTR") to implement Section 306. Regulation BTR took effect on January 26, 2003.¹⁶⁹

For a foreign private issuer, a blackout period generally means any period of more than three consecutive business days during which the ability to purchase or sell an interest in the issuer’s equity securities held in an "individual account plan" (such as a 401(k) plan)¹⁷⁰ is temporarily suspended with respect to not less than 50% of participants or beneficiaries located in the United States and:

the number of participants and beneficiaries located in the United States subject to the temporary suspension exceeds 15% of the total number of employees of the issuer and its consolidated subsidiaries; or
more than 50,000 participants or beneficiaries located in the United States are subject to the temporary suspension.¹⁷¹

Regulation BTR prohibits, subject to certain exceptions, any director or executive officer of an issuer from purchasing, selling or otherwise transferring the issuer’s equity securities during any blackout period applicable to the securities, if the officer acquires or previously acquired the securities in connection with his or her service or employment as a director or officer.¹⁷² Under Regulation BTR, in any case where a director or officer is subject to a blackout trading restriction under Section 306 of Sarbanes-Oxley, the issuer must timely notify each director or officer and the SEC of the blackout period and provide certain additional information (including the reasons for the blackout period).¹⁷³ The issuer must file any notice of this type as an exhibit to its annual report on Form 20-F.¹⁷⁴

Subject to a two-year statute of limitations,¹⁷⁵ profits realized by an insider in violation of Section 306 (regardless of the insider’s intention upon entering into the transaction) will be recoverable by the issuer.¹⁷⁶ In addition, if the issuer fails to institute an action to recover such profits within 60 days after being requested to do so by a shareholder, the shareholder can then initiate the action to recover on behalf of the issuer.¹⁷⁷

Loans to Executives
Section 402(a) of the Sarbanes-Oxley Act adds new Section 13(k) to the Exchange Act. Under Section 13(k), it is illegal for an issuer to "extend or maintain credit, to arrange for the extension of credit, or to renew an extension of credit, in the form of a personal loan to or for any director or executive officer (or equivalent thereof)" of that issuer.¹⁷⁸ Section 13(k) covers both direct extensions and indirect extensions of credit, including through subsidiaries.¹⁷⁹ Section 13(k) took effect on July 30, 2002, and does not require implementing SEC regulations.

Section 13(k) contains certain exemptions, including:

any loan existing on July 30, 2003, unless its terms are materially modified or the loan is renewed;¹⁸⁰
consumer credit and extensions of credit under a charge card;¹⁸¹ and
certain bank loans.¹⁸²

The broad sweep of Section 13(k), coupled with the absence of SEC guidance, has raised a number of thorny questions for issuers. In response, a group of 25 law firms (including Latham & Watkins) has issued a paper attempting to interpret Section 13(k) (the "Interpretive Paper").¹⁸³ The Interpretive Paper contends that the following should generally be regarded as permissible under Section 13(k):

cash advances to reimburse travel and similar expenses while performing executive duties;¹⁸⁴
personal usage of a company credit card and company car, and relocation expenses required to be reimbursed;¹⁸⁵
"stay" and "retention" bonuses subject to repayment if an employee terminates employment before a designated date;¹⁸⁶
indemnification advances for litigation;¹⁸⁷
tax indemnity payments to overseas-based executive officers;¹⁸⁸
loans by a parent or shareholder that is a foreign private issuer but not subject to Sarbanes-Oxley, to the executive officer of a whollyowned subsidiary that is subject to Sarbanes-Oxley, if the subsidiary has not "arranged" the loan and the loan is made by reason of service to the parent, not the subsidiary;¹⁸⁹ and
most "cashless" option exercises.¹⁹⁰

Forfeiture of Bonuses
Section 304 of the Sarbanes-Oxley Act provides that if an issuer is required to "prepare an accounting restatement due to the material noncompliance of the issuer, as a result of misconduct" with any financial reporting requirements under the securities laws, the CEO and CFO must reimburse the issuer for:

all bonuses or other incentive-based or equity-based compensation received from the issuer during the 12-month period following the first public issuance or filing with the SEC (whichever is first) of the financial document embodying the financial reporting requirement; and
any profits received from the sale of the issuer’s securities during that 12-month period.

Section 304 took effect on July 30, 2002 and does not require SEC implementing rules. It remains unclear whether, among other things, the definition of "misconduct" applies to mistakes as opposed to knowing or reckless conduct.¹⁹¹ In the case of foreign private issuers, it is also not certain how Section 304 will work if the required repayment is in conflict with the CEO’s or CFO’s rights under local employment laws.¹⁹²

Research Analysts
Section 501 of the Sarbanes-Oxley Act added new Section 15D to the Exchange Act. Section 15D directs the SEC to adopt rules "reasonably designed to address conflicts of interest" involving securities analysts. The SEC has adopted Regulation Analyst Certification ("Regulation AC") to implement Section 15D.¹⁹³ Regulation AC took effect on April 14, 2003.

Regulation AC requires that any broker or dealer, or certain persons associated with brokers or dealers, must include in any research reports that they publish or circulate to a U.S. person in the United States, a "clear and prominent" statement from the research analyst:¹⁹⁴

attesting that all of the views expressed in the research report accurately reflect the research analyst’s personal views about the securities or issuers covered in the report; and
either that no part of the analyst’s compensation is related to specific recommendations expressed in the report, or if it is related, details of the source, amount and purpose of the compensation and how the compensation could influence the recommendations expressed in the report.

A research analyst is the person "primarily responsible" for the preparation of the content of the research report.¹⁹⁵ If more than one analyst is primarily responsible, all must certify.¹⁹⁶ Certifications should either appear on the front page of the research report or the front page should disclose where the certification is to be found.¹⁹⁷ The first certification (as to accuracy) applies both to the rating as well as to the analysis in the research report, and the SEC has warned that a rating that contradicts the analysis could both render the certification false, as well as potentially violate the anti-fraud provisions of the U.S. federal securities laws.¹⁹⁸

In addition, Regulation AC mandates that brokers or dealers that provide research reports to U.S. persons in the United States prepared by an analyst employed by them must keep certain quarterly records of public appearances of the analyst containing:¹⁹⁹

a statement by the analyst attesting that the views expressed in the public appearances accurately reflected his or her personal views about the securities or issuers covered in the report; and
a statement that no part of the analyst’s compensation is related to specific recommendations or views expressed in the public appearances.

However, the record-keeping requirement only applies to public appearances when the research analyst is physically present in the United States.²⁰⁰

Regulation AC contains an exclusion to cover foreign research. In particular, "foreign persons" located outside the United States who are not associated with a U.S. registered broker-dealer are exempt from Regulation AC if they:²⁰¹

prepare a research report concerning a "foreign security;" and
provide the research report to a U.S. person in the United States in accordance with the exemption under 1934 Act Rule 15a-6(a)(2) for non-U.S. broker-dealers providing research reports to major U.S. institutional investors.

A "foreign person" for these purposes means any non-U.S. person, and a "foreign security" means a security issued by a foreign issuer for which the U.S. market is not the principal trading market.²⁰²

Liability Issues Relating to Sarbanes-Oxley
The Sarbanes-Oxley Act has a wideranging impact on liability under the U.S. federal securities laws. It creates new U.S. federal criminal offenses relating to securities, substantially increases the penalties for existing offenses and increases the SEC’s enforcement powers in various ways.²⁰³ Among other things, the Sarbanes- Oxley Act:

adds a new section to the U.S. federal criminal code outlawing the alteration, destruction or concealment of records to impede a U.S. federal investigation;²⁰⁴
amends existing law to provide for fines and imprisonment of up to 20 years for corruptly altering, destroying or concealing documents with the intent of obstructing an official proceeding;²⁰⁵
amends existing law to provide for fines and imprisonment of up to 10 years for anyone who knowingly takes any action to retaliate against a person for providing information to U.S. federal law enforcement officials relating to violations or potential violations of U.S. federal law;²⁰⁶
creates a new securities fraud crime (with penalties of up to 25 years imprisonment plus fines) of knowingly executing a scheme or artifice to defraud any person in connection with any security of an issuer or to obtain, by means of false or fraudulent representations, any money in connection with the purchase or sale of a security;²⁰⁷
increases the maximum individual penalty for violations of the Exchange Act from $1 million and 10 years imprisonment to $5 million and 20 years imprisonment, and raises the maximum corporate fine from $2.5 million to $25 million;²⁰⁸
gives the SEC the ability, after notice and a hearing, to force an issuer subject to an SEC investigation to put "extraordinary payments" to directors, officers, partners, controlling persons, agents or employees into temporary escrow;²⁰⁹
gives the SEC the administrative authority to impose a ban on a person from acting as a director or an officer of an issuer (the so-called "officer and director bar");²¹⁰ previously, the SEC could only impose the officer and director bar by means of a court order;²¹¹
lowers the standard for judicial imposition of the officer and director bar to "unfitness" to serve as an officer and director, from "substantial unfitness;"²¹²
prohibits an issuer from retaliating against "whistleblowing" employees who provide information or assist an investigation regarding violations of U.S. federal securities law, SEC regulations or U.S. federal law on shareholder fraud; and²¹³
amends the U.S. federal bankruptcy laws to prohibit the discharge in bankruptcy of debts resulting from judgments, settlements or court orders in cases involving securities fraud.²¹⁴

Annex A—Effective Dates for Certain Sarbanes-Oxley Sections and Related SEC Rulemaking

Note: In chronological order of effectiveness; all dates shown are those applicable to foreign private issuers

Provision (Sarbanes-Oxley Section and SEC Rule(s))	Effective as of
Material Correcting Adjustments (Sarbanes-Oxley §401(a); 1934 Act Section 13(i))	July 30, 2002
Section 906 Certification Requirement (Sarbanes-Oxley §906; 1934 Act Rules 13a-14(b) and 15d-14(b))	July 30, 2002, for the requirement to certify; however, the requirement to provide the Section 906 certification as an exhibit took effect on August 14, 2003
Loans to Executives (Sarbanes-Oxley §402(a); 1934 Act Section 13(k))	July 30, 2002
Forfeiture of Bonuses (Sarbanes-Oxley §304)	July 30, 2002
Section 302 Certification Requirements; Disclosure Controls and Procedures (Sarbanes-Oxley §302; 1934 Act Rules 13a-14, 15d-14, 13a-15, 15d-15; Form 20-F, Item 15)	August 29, 2002; however, the text of the Section 302 certification as modified by the rules adopted under Section 404 generally took effect on August 14, 2003 (except with respect to certain portions of the certification dealing with internal control over financial reporting, which take effect on July 15, 2005)
Blackout Trading Restrictions (Sarbanes-Oxley §306; Regulation BTR)	January 26, 2003
Auditor Record Retention (Sarbanes-Oxley §802; Regulation S-X, Rule 2-06)	March 3, 2003
Non-GAAP Financial Measures (Sarbanes-Oxley §401(b); Regulation G; Regulation S-K, Item 10(e))	March 28, 2003
Research Analysts (Sarbanes-Oxley §501; Regulation AC)	April 14, 2003
Auditor Independence (Sarbanes-Oxley Title II; Regulation S-X, Rules 2-01 and 2-07; 1934 Act Rule 10A-2; Form 20-F, Item 16C)	May 6, 2003
Off-Balance Sheet and other MD&A Disclosure (Sarbanes-Oxley §401(a); Form 20-F, Item 5)	June 15, 2003, except with respect to inclusion of a table of contractual obligations in MD&A, which took effect on December 15, 2003
Improper Influence on the Conduct of Audits (Sarbanes-Oxley §303; 1934 Act Rule 13b2-2(a)-(c))	June 27, 2003
Audit Committee Financial Expert (Sarbanes-Oxley §407(a); Form 20-F, Item 16A)	July 15, 2003, except with respect to the disclosure of the "independence" of the audit committee financial expert which takes effect as of July 31, 2005
Code of Ethics (Sarbanes-Oxley §406; Form 20-F, Item 16B)	July 15, 2003
Attorney Conduct Rules (Sarbanes-Oxley §307; Part 205)	August 5, 2003
Management Assessment of Internal Controls (Sarbanes-Oxley §404; 1934 Act Rules 13a-15, 15d-15; Form 20-F, Item 15)	July 15, 2005, except with respect to disclosure of certain changes in internal controls over financial reporting, which took effect on August 14, 2003
Standards Relating to Listed Company Audit Committees (Sarbanes-Oxley §301; 1934 Act Rule 10A-3)	July 31, 2005

Footnotes
^{1. Sarbanes-Oxley Act Section 2(a)(7).
2. Certification of Disclosure in Companies’ Quarterly and Annual Reports, Securities Act Release No. 8124, Exchange Act Release No. 46427, Investment Company Act Release No. 25722 [2002 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶86,720, at 86,132, 86,152 (Aug. 28, 2002) [hereinafter Certification Adopting Release].
3. Id. The term "disclosure controls and procedures" is defined in 1934 Act Rules 13a-15(e) and 15d-15(e).
4. Certification Adopting Release, ¶86,720, at 86,126.
5. Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, Securities Act Release No. 8238, Exchange Act Release No. 47986, Investment Company Act Release No. 26068 [2003 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶86,923, at 87,676 (June 5, 2003) [hereinafter Management’s Reports on Internal Control Adopting Release].
6. Id.

7. The SEC has stated that current reports such as those on Forms 6-K and 8-K, as opposed to periodic reports (i.e., quarterly and annual reports), are not covered by Section 302’s certification requirements. Certification Adopting Release, ¶86,720, at 86,130. Foreign private issuers are nevertheless required to design and maintain disclosure controls and procedures to ensure full and timely disclosure in current reports. Id.

8. 1934 Act Rules 13a-14(a), 15d-14(a).
9. Form 20-F, Instructions as to Exhibits, Instruction 12.
10. The term "internal control over financial reporting" is defined in 1934 Act Rule 13a-15(f) and 15d-15(f).
11. This portion of the Section 302 certification does not take effect until the annual report on Form 20-F for the first fiscal year ending on or after July 15, 2005. Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,697 and 87,701, as amended by Management’s Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Reports, Securities Act Release No. 8392, Exchange Act Release No. 49313, Investment Company Act Release No. 26357 [2003-2004 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶87,144, at 89,123 (Feb. 24, 2004).
12. Similarly, this portion of the Section 302 certification does not take effect until July 15, 2005. Id.

13. Note, however, that no specific date for the evaluation is specified. Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,701.
14. 1934 Act Rules 13a-14(a), 15d-14(a) and Form 20-F, Instructions as to Exhibits, Instruction 12.
15. Certification Adopting Release, ¶86,720, at 86,132. However, "a company’s certifying officers may temporarily modify the content of their Section 302 certification to eliminate certain references to internal control over financial reporting until the compliance date." Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,676.
16. 1934 Act Rules 13a-15(a), 15d-15(a).
17. 1934 Act Rules 13a-15(b), 15d-15(b).
18. Form 20-F, Item 15(a).
19. 1934 Act Rules 13a-15(e), 15d-15(e).
20. Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,699. Not "filing" will also limit enforcement of the certificate to criminal proceedings rather than civil litigation. John J. Huber and Julie K. Hoffman, The Sarbanes-Oxley Act of 2002 and SEC Rulemaking, ¶II.B.1.c, at 20 (April 2, 2004) (http://www.lw.com/upload/docs/ doc84.pdf) [hereinafter Huber Outline].
21. Additional Form 8-K Disclosure Requirements and Acceleration of Filing Date, Securities Act Release No. 8400, Exchange Act Release No. 49424 [Transfer Binder 2003-2004] Fed. Sec. L. Rep. (CCH) ¶87,158, at 89,493 n.146 (March 16, 2004).
22. Huber Outline, ¶II.B.3.b(1), at 23.
23. Huber Outline, ¶II.B.2.b(3), at 21.
24. Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,699.
25. Public Company Accounting Oversight Board, An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements, PCAOB Release No. 2004-001, PCAOB Rulemaking Docket Matter No. 008 [Transfer Binder 2003-2004] Fed. Sec. L. Rep. (CCH) ¶87,151, at 89,327 (March 9, 2004) [hereinafter Auditing Standard No. 2 Release].
26. Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,697, as amended by Management’s Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Reports, Securities Act Release No. 8392, Exchange Act Release No. 49313, Investment Company Act Release No. 26357 [2003-2004 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶87,144, at 89,123 (Feb. 24, 2004).
27. 1934 Act Rules 13a-15(f); 15d-15(f).
28. Form 20-F, Item 15(b).
29. Even if the evaluation framework used by a foreign private issuer does not require a statement as to the effectiveness of the issuer’s system of internal control over financial reporting, the issuer must nevertheless state affirmatively whether such controls are effective. Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,685 n.68.
30. Form 20-F, Items 15(c) and (d).
31. Management’s Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Reports, Securities Act Release No. 8392, Exchange Act Release No. 49313, Investment Company Act Release No. 26357 [2003- 2004 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶87,144, at 89,123 (Feb. 24, 2004). See also Management’s Reports on Internal Control Adopting Release, ¶86,923, at ¶87,698 regarding the effective date for the disclosure of certain changes in internal control over financial reporting.
32. Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,685.
33. Id. at ¶86,923 at 87,685 n.67.
34. Id. ¶86,923 at 87,685.
35. Id.

36. Id. Instruction 1 to Item 15. The SEC has stated that it believes it is important for the internal control report to be located near the auditor’s attestation report, and that it expects issuers will place the report and attestation near MD&A disclosure or immediately preceding the financial statements. Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,687.
37. Management’s Reports on Internal Control Adopting Release, ¶86,923, at 87,691.
38. SEC Office of the Chief Accountant, Division of Corporation Finance, Management’s Report On Internal Control Over Financial Reporting and Disclosure in Exchange Act Periodic Reports: Frequently Asked Questions (June 22, 2004) (http://www.sec.gov/ info/accountants/controlfaq0604.htm).
39. Id. Question 2.
40. Id. Question 3.
41. Id. Question 5.
42. Id. Question 9.
43. Id.

44. Id. Question 10.
45. Id. Question 11.
46. Auditing Standard No. 2 Release, ¶87,151, at 89,329.
47. The PCAOB believed that "attestation" was "insufficient to describe the process of assessing management’s report on internal controls." Id.

48. Id.
49. Id.

50. Id.

51. Id. ¶87,151, at 89,334.
52. Id.

53. Id.

54. Id.

55. Id.

56. Id.

57. Id.

58. Id. ¶87,151, at 89,334-89,335.
59. Id. ¶87,151, at 89,336.
60. Id. ¶87,151, at 89,335.
61. Id.

62. Id. ¶87,151, at 89,336.
63. Id.

64. Id.

65. Id.

66. Id.

67. Conditions for Use of Non-GAAP Financial Measures, Securities Act Release No. 8176, Exchange Act Release No. 47226, Financial Reporting Release No. 65 [Transfer Binder 2002-2003] Fed. Sec. L. Rep. (CCH) ¶86,816, at 86,830 (Jan. 22, 2003) [hereinafter Non-GAAP Financial Measures Adopting Release]; see also Latham & Watkins Client Alert No. 257, SEC Adopts Rules for Disclosure of EBITDA and Other "Non-GAAP Financial Measures" (http://www.lw.com/ resource/publications/_pdf/pub578.pdf).
68. Conditions for Use of Non-GAAP Financial Measures, Securities Act Release No. 8145, Exchange Act Release No. 46788 [2002 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶86,737, at 86,444-86,446 (Nov. 4, 2002).
69. Regulation G, Rule 100(a).
70. Id. Rule 101(a)(1). The term does not cover operating measures. Id. Rule 101(a)(2).
71. Id. Rule 101(b). In addition, if the foreign private issuer prepares its primary financial statements under U.S. GAAP, "GAAP" would mean U.S. GAAP. Id.

72.. Id. Rule 101(a).
73 Id.

74. Id. Rule 100(b).
75. Non-GAAP Financial Measures Adopting Release, ¶86,816, at 86,830.

76. Regulation G, Rule 100(c).
77. Non-GAAP Financial Measures Adopting Release, ¶86,816, at 86,830.

78. Regulation S-K, Item 10(e)(1)(i).
79. Id. Item 10(e)(1)(ii).
80. Id. Item 10, Note to Paragraph (e).

81. SEC Office of the Chief Accountant, Division of Corporate Finance, Frequently Asked Questions Regarding the Use of Non-GAAP Financial Measures, Question 8 (June 13, 2003) (http://www.sec.gov/ divisions/corpfin/faqs/nongapfaq.htm).
82. Id. Question 14.
83. Id. Question 15.
84. See Disclosure in Management’s Discussion and Analysis about Off-Balance Sheet Arrangements and Aggregate Contractual Obligations, Securities Act Release No. 8182, Exchange Act Release No. 47264, Financial Reporting Release No. 67, International Series Release No. 1266 [Transfer Binder 2002-2003] Fed. Sec. L. Rep. (CCH) ¶86,821, at 86,969 (Jan. 27, 2003) [hereinafter Off-Balance Sheet Adopting Release].
85. Id.

86. Form 20-F, Item 5.E.1.
87. Id. Items 5.E.1.(a)-(d).
88. Id. Item 5.E.2.
89. Off-Balance Sheet Adopting Release, Sections ¶86,821, at 86,973 and 86,977.
90. Id. ¶86,821, at 86,984.
91. Id.

92. Form 20-F, Item 5.F.1.
93. Id. Item 5.F.2.
94. Off-Balance Sheet Adopting Release, ¶86,821, at 86,982 and 86,976 n.73.
95. Commission Statement about Management’s Discussion and Analysis of Financial Condition and Results of Operations, Securities Act Release No. 8056, Exchange Act Release No. 45321, Financial Reporting Release No. 61 [Transfer Binder 2001-2002] Fed. Sec. L. Rep. (CCH) ¶86,617, at 85,152 (Jan. 22, 2002).
96. Off-Balance Sheet Adopting Release, ¶86,821, at 86,974.
97. 1934 Act Rule 10A-3(a)(5)(i)(A); see also Standards Relating to Listed Company Audit Committees, Securities Act Release No. 8220, Exchange Act Release No. 47654, Investment Company Act Release No. 26001 [Transfer Binder 2003] Fed. Sec. L. Rep. (CCH) ¶86,902, at 87,402 (April 9, 2003) [hereinafter Listed Company Audit Committee Adopting Release].
98. 1934 Act Rule 10A-3(b)(1)(i).
99. 1934 Act Rule 10A-3(b)(1)(ii)(A).
100. 1934 Act Rule 10A-3(b)(1)(ii)(B).
101. 1934 Act Rule 10A-3(e)(1)(i).
102. 1934 Act Rule 10A-3(e)(1)(ii)(A).
103. 1934 Act Rule 10A-3(b)(1)(iv)(C).
104. 1934 Act Rule 10A-3(b)(1)(iv)(D).
105. 1934 Act Rule 10A-3(b)(1)(iv)(E).
106. 1934 Act Rule 10A-3(b)(1)(iv)(A).
107. 1934 Act Rule 10A-3(b)(2).
108. 1934 Act Rule 10A-3(b)(3).
109. 1934 Act Rule 10A-3(b)(4).
110. 1934 Act Rule 10A-3(b)(5).
111. Instruction 1 to 1934 Act Rule 10A-3.
112. Id.

113. Instruction 2 to 1934 Act Rule 10A-3.
114. 1934 Act Rule 10A-3(c)(3).
115. 1934 Act Rule 10A-3(d) and Form 20-F, Item 16.D.
116. Id.

117. Form 20-F, Items 16A(a)(1) and (3).
118. Id. Instruction 3 to Item 16A.
119. Id. Item 16A(a)(2).
120. Id.; see also, Listed Company Audit Committee Adopting Release, ¶86,902 at 87,433. Note that for listed issuers the audit committee financial expert will need to satisfy the definition of "independence" as set forth under 1934 Act Rule 10A-3. Id.

121. Disclosure Required by Sections 406 and 407 of the Sarbanes-Oxley Act of 2002, Securities Act Release No. 8177, Exchange Act Release No. 47234 [Transfer Binder 2002-2003], Fed. Sec. L. Rep. (CCH) ¶86,818, at 86,885 (as corrected January 24, 2003 and March 31, 2003) [hereinafter Sections 406 and 407 Adopting Release].
122. Form 20-F, Item 16A(b).
123. Id. Item 16A(c).
124. Id. Instruction 3 to Item 16A.
125. Sections 406 and 407 Adopting Release, ¶86,818, at 86,883.
126. Form 20-F, Item 16A(d)(1).
127. Id. Items 16A(d)(2)-(3).
128. Strengthening the Commission’s Requirements Regarding Auditor Independence, Securities Act Release No. 8183, Exchange Act Release No. 47265, Investment Company Act Release No. 25915, Investment Advisers Act Release No. 2103 [Transfer Binder 2002-2003] Fed. Sec. L. Rep. (CCH) ¶86,822, at 87,003 (Jan. 28, 2003).
129. S-X Rule 2-01(c)(2)(iii)(B); see also 1934 Act Section 10A(l) (auditor may not audit an issuer whose CEO, controller, CFO or chief accounting officer was employed by the auditor and participated in the audit during the one-year period preceding the date of the initiation of the audit in question). Generally speaking, persons other than the lead or concurring partner who provided 10 or fewer hours of audit, review or attest services during the relevant period are not considered to be members of the audit engagement team. S-X Rule 2- 01(c)(2)(iii)(B)(2).
130. S-X Rule 2-01(c)(4); see also 1934 Act Section 10A(g) (substantially identical limitations).
131. S-X Rule 2-01(c)(6); see also 1934 Act Section 10A(j) (unlawful to act as auditor if lead (or coordinating) audit partner (having primary responsibility for the audit) or audit partner responsible for reviewing the audit has performed audit services for the issuer in the each of the prior five fiscal years of the issuer).
132. S-X Rule 2-01(c)(7); see also 1934 Act Sections 10A(h)-(i) (all audit and permitted non-audit services must be pre-approved by the audit committee (subject to certain de minimis exceptions)). The SEC has stated that an issuer’s audit committee must follow three requirements in its use of preapproval through policies and procedures. First, the policies and procedures must be detailed as to the particular service to be provided. Second, the audit committee must be informed about each service. Third, the policies and procedures cannot result in the delegation of the audit committee’s authority to management. Accordingly, monetary limits cannot be the only basis for the pre-approval policies and procedures. SEC Office of the Chief Accountant, Application of the January 2003 Rules on Auditor Independence: Frequently Asked Questions, Question 22 (http://www.sec.gov/info/accountants/ocafa qaudind08703.htm). Note that under Auditing Standard No. 2 of the PCAOB, an issuer’s audit committee cannot pre-approve internal control services as a category, but must instead approve each service.
133. S-X Rule 2-01(c)(8).
134. S-X Rule 2-07(a); see also 1934 Act Section 10A(k) (substantially identical requirements).
135. Form 20-F, Item 16C(a).
136. = Id. Item 16C(b).
137. Id. Item 16C(c).
138. Id. Item 16C(d).
139. Id. Item 16C(e).
140. Id. Item 16C(f).
141. Improper Influence on Conduct of Audits, Exchange Act Release No. 47890, Investment Company Act Release No. 26050, Financial Reporting Release No. 71 [Transfer Binder 2003] Fed. Sec. L. Rep. (CCH) ¶86,921, at 87,655 (May 20, 2003) [hereinafter Improper Influence Adopting Release].
142. 1934 Act Rule 13b2-2(b)(1).
143. Improper Influence Adopting Release, ¶86,921, at 87,656.
144. Id.

145. 1934 Act Rule 13b2-2(b)(2).
146. Retention of Records Relevant to Audits and Reviews, Securities Act Release No. 8180, Exchange Act Release No. 47241, Investment Company Act Release No. 25911, Financial Reporting Release No. 66 [Transfer Binder 2002-2003] Fed. Sec. L. Rep. (CCH) ¶86,819, at 86,916 (Jan. 24, 2003) [hereinafter Retention Release].
147. S-X Rule 2-06(a). The SEC required a seven-year period rather than the five-year period mandated in Section 802, because, among other things, Section 103 of the Sarbanes-Oxley Act directs the Public Company Accounting Oversight Board to require auditors to retain audit workpapers and other materials that support the audit for seven years. Retention Release, ¶86,819, at 86,917.
148. S-X Rule 2-06(b).
149. S-X Rule 2-06(c).
150. See Certification Adopting Release, ¶86,720, at 86,130.
151. Implementation of Standards of Professional Conduct for Attorneys, Securities Act Release No. 8185, Exchange Act Release No. 47276, Investment Company Act Release No. 25919 [Transfer Binder 2002- 2003] Fed. Sec. L. Rep. (CCH) ¶86,823, at 87,069 (Jan. 29, 2003) [hereinafter Attorney Conduct Adopting Release].
152. Part 205.2(a)(1).
153. Part 205.2(a)(2)(ii).
154. Part 205.2(j).
155. Part 205.2(i).
156. Part 205.3(b)(1).
157. Part 205.3(b)(2).
158. Part 205.3(b)(3).
159. Part 205.3(c)(1).
160. Part 205.2(k).
161. Part 205.3(c)(1).
162. Part 205.3(c)(2).
163. Attorney Conduct Adopting Release ¶86,823, at 87,069.

164. Sections 406 and 407 Adopting Release ¶86,818, at 86,883.

165. Form 20-F, Item 16B(a).
166. Id. Item 16B(b).
167. Id. Item 16B(c).
168. Id. Items 16B(d) and (e).
169. Insider Trades During Pension Fund Blackout Periods, Exchange Act Release No. 47225, Investment Company Act Release No. 25909 [Transfer Binder 2002- 2003] Fed. Sec. L. Rep. (CCH) ¶86,817, at 86,851 (Jan. 22, 2003).
170. The term "individual account plan" is defined in Regulation BTR, Rule 100(j).
171. Id. Rule 100(b)(2).
172. Id. Rule 101(a).
173. Id. Rule 104.
174. Form 20-F, Instructions as to Exhibits, Instruction 10. Although the issuer need not submit the notice under Form 6-K, if it does so it is not separately required to include the notice as an exhibit to its annual report on Form 20-F. Id.

175. Regulation BTR, Rule 103(b).
176. Id. Rule 103(a).
177. Id. Rule 103(b).
178. 1934 Act Section 13(k)(1).
179. Id.

180. Id.

181. 1934 Act Section 13(k)(2).
182. 1934 Act Section 13(k)(3).
183. Sarbanes-Oxley Act: Interpretive Issues under Section 402—Prohibition of Certain Insider Loans (Oct. 15, 2002) (http://www.lw.com/upload/docs/doc29.pdf).
184. Id. at 3-4.
185. Id. at 4.
186. Id.

187. Id. at 4-5.
188. Id. at 6.
189. Id.

190. Id. at 8-11.
191. See Huber Outline, ¶V.C.1.a, at 95.
192. Id. ¶V.C.2, at 97.
193. Regulation Analyst Certification, Securities Act Release No. 8193, Exchange Act Release No. 47384 [Transfer Binder 2002- 2003] Fed. Sec. L. Rep. (CCH) ¶86,833, at 87,233 (Feb. 20, 2003) [hereinafter Regulation AC Release].
194. Regulation AC, Rule 501(a).
195. Id. Rule 500.
196. Id. Certification is not, however, required from "junior analysts." Regulation AC Release, ¶86,833, at 87,236.
197. Regulation AC Release, ¶86,833, at 87,235 n.11.
198. Id. ¶86,833, at 87,234.
199. Regulation AC, Rule 502(a).
200. Id. Rule 502(c).
201. Id. Rule 503.
202. Id. Rule 500. A "foreign issuer" is any foreign government or foreign private issuer. 1933 Act Rule 902(e).
203. Huber Outline, ¶X.A, at 172.
204. Sarbanes-Oxley Act Section 802(a) (adding new Section 1519 of 18 U.S.C.); Huber Outline, ¶X.A.1.a(1), at 172.
205Sarbanes-Oxley Act Section 1102 (amending 18 U.S.C. Section 1512); Huber Outline, ¶X.A.1.b, at 175.
206. Sarbanes-Oxley Act Section 1107 (amending 18 U.S.C. Section 1513); Huber Outline, ¶X.A.2, at 175.
207Sarbanes-Oxley Act Section 807 (adding new Section 1348 to 18 U.S.C.); Huber Outline, ¶X.A.3, at 175.
208. Sarbanes-Oxley Act Section 1106 (amending 1934 Act Section 32(a)); Huber Outline, ¶X.A.4.a(7), at 177.
209. Sarbanes-Oxley Act Section 1103 (amending 1934 Act Section 21C(c)); Huber Outline, ¶X.B.1, at 177.
210. Sarbanes-Oxley Act Section 1105 (amending 1934 Act Section 21C and 1933 Act Section 8A); Huber Outline, ¶X.B.2, at 178.
211. Huber Outline, ¶X.B.2.a, at 178.
212. Sarbanes-Oxley Act Section 305 (amending 1934 Act Section 21(d)(2) and 1933 Act Section 20(e)); Huber Outline, ¶X.B.2.c, at 178.
213. Sarbanes-Oxley Act Section 806 (adding new Section 1514A to 18 U.S.C.); Huber Outline, ¶X.C.2.a, at 179-180.
214. Sarbanes-Oxley Act Section 803 (adding new Section 523(a) to 11 U.S.C.); Huber Outline, ¶X.C.3.a, at 180. }

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