(The news featured below is a selection from the news covered in Federal Securities Law Reporter, which is distributed to subscribers of Federal Securities Law Reporter.)

Foreign Issuers May File Without Reconciliation Before Effective Date

Foreign private issuers that use International Financial Reporting Standards and wish to file an annual report without reconciliation to U.S. GAAP before the effective date of an SEC release eliminating the GAAP reconciliation requirement may be permitted to do so, according to SEC staff guidance. In that situation, the foreign private issuer seeking such relief and consideration would have to make the request in writing to the staff.

On December 21, 2007 the SEC adopted a final rule allowing foreign private issuers to file financial statements prepared under IFRS without reconciliation to U.S. GAAP. The rule will become effective on March 4, 2008. Based on the number of Form 20-F filings with IFRS financial statements during the last twelve months, the SEC estimates that approximately 140 companies that file Form 20-F will be able to take advantage of the new rule. As additional jurisdictions adopt IFRS as their basis of accounting in the future, the number of issuers that use IFRS is expected to increase.

Generally, foreign private issuers are being advised that, until this new rule is effective, they are subject to the existing rules regarding the inclusion of U.S. GAAP information in filings with the Commission. However, the staff is aware that some foreign private issuers with a fiscal year ending after November 15, 2007 that prepare their financial statements using IFRS, as issued by the International Accounting Standards Board, will want to file their annual report on Form 20-F before March 4, 2008. These companies also want to exclude U.S. GAAP information from that filing.

The staff does not want to discourage companies from filing their Form 20-F before March 4, 2008. Thus, the staff encourages these companies to contact the staff in the Division of Corporation Finance to discuss this issue, as well as their own particular facts and circumstances. More broadly, companies are encouraged to discuss any other implementation issues with the staff.

The staff also noted that the same release provides similar relief from the requirement to provide U.S. GAAP information if the financial statements are filed under Rules 3-05, 3-09, 3-10 and 3-16. Likewise, companies that intend to file financial statements with a fiscal year ending after November 15, 2007, that are prepared using IFRS that exclude U.S. GAAP information in a filing under the Exchange Act before March 4, 2008 are similarly encouraged to discuss their fact pattern with the staff.

As noted in the SEC release and the staff guidance, the financial statements filed by the foreign private issuers must be prepared using IFRS as adopted by the International Accounting Standards Board and not IFRS as jurisdictionally modified by another entity, such as the European Union. The staff said that the IASB's sustainability, governance and ability to operate as a stand-alone standard setter were significant considerations in its decision to allow IFRS financial statements without reconciliation.

In the comment process leading up to the final rule, the staff received many requests to accept financial statements prepared in accordance with a jurisdictional variation of IFRS, particularly as adopted by the European Union. Commenters noted that European Union-listed issuers are required to prepare their financial statements in accordance with the European Union's version of IFRS. Moreover, they noted that there was only one difference between IFRS as adopted by the IASB and European Union IFRS, and it related to hedge accounting for certain financial instruments.

The staff determined to require that financial statements must be prepared using IFRS as adopted by the IASB in order to be eligible for the exemption from the reconciliation requirement because it believes that allowing the other approaches would not as effectively foster the development and use of a single set of high-quality global accounting standards.