Earlier this week, the Securities and Exchange Commission proposed amendments to Regulation S-K, and related rules and forms. According to the SEC, these are intended to modernize and simplify certain disclosure requirements in a manner that reduces the costs and burdens on registrants while continuing to provide all material information to investors. While I view the changes as modest, the proposing release is not. It weighs in at a respectable 253 pages. Needless to say, I am still working my way through it. Almost immediately, I became mired in minutia.
One of the SEC’s proposals is “to streamline the instruction to Item 501(b)(1) by eliminating the portion that discusses when a name change may be required and the exception to that requirement”. Item 501(b)(1) requires disclosure of a registrant’s name, including an English translation of the name of foreign registrants. And that is were I became stuck. What exactly, I wondered, is a “foreign registrant”. I checked the Securities Act, I checked the General Rules and Regulations under the Securities Act, and I checked Regulation S-X. None made any mention of “foreign registrants. Regulation S-K, uses the term in Items 201, 202 and 501 but makes no attempt to define it. It appears that the SEC expects us all to be as discerning as Justice Potter Stewart (“I know it when I see it” Jacobellis v. Ohio, 378 U.S. 184 (1964)). It is true that the SEC defines “foreign private issuer” in Rule 405, but is that the same thing as a “foreign registrant”? If it is, why employ two to do the work of one?
Assuming we know what a foreign registrant is, why must they translate their names when domestic registrants do not?