Fried, Frank, Harris, Shriver & Jacobson August 26, 2003

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1 August 26, 2003 Timeline Effective Dates for Implementing The Sarbanes-Oxley Act of 2002 ("SOX") and New and Proposed SEC, NYSE & Nasdaq Rules for Non-U.S. Issuers Disclosure 1. CEO/CFO certification A. Section 906 of SOX B. Section 302 of SOX SEC Release No (August 29, 2002) C. Item 15 of Form 20-F General Instruction B(6) of Form 40-F SEC Release No (August 29, 2002) 2. Disclosure controls SEC Release No (August 29, 2002) Rules Currently Effective Requires the CEO and CFO to certify in an exhibit to each Form 20-F or Form 40-F containing financial statements filed by an issuer that (1) the report fully complies with section 13(a) or 15(d) of the Securities Exchange Act and (2) the information contained in the report fairly presents in all material respects the financial condition and results of operations of the issuer. (The certification must be included as an exhibit beginning with reports due on or after August 14, 2003.) Requires the CEO and CFO to certify "in an exhibit to each Form 20-F and Form 40-F that based on his or her knowledge the report does not contain an untrue statement of a material fact and the financial information in the report fairly presents in all material respects the financial condition of the issuer. Certifying officers must also state, among other things, that: (1) they are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting, (2) they have designed disclosure controls (or such controls were designed under their supervision) to ensure material information is made known to such officers, (3) they have designed internal control over financial reporting (or such controls were designed under their supervision) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, (4) they evaluated the effectiveness of the disclosure controls and have disclosed in the periodic report their conclusions as to the effectiveness of such controls, (5) they have disclosed to the auditors and audit committee all significant deficiencies and material weaknesses in the internal control over financial reporting and any fraud that involved management or other employees that have a significant role in the company's internal control over financial reporting, and (6) they have disclosed in the annual report any changes that materially affected, or are reasonably likely to materially affect, the issuer's internal control over financial reporting during the period covered by the Form 20-F or Form 40-F. (Rule is currently effective except for aspects adopted on June 5, 2003, which become effective August 14, 2003 or, in the case of certain representations relating to internal controls, for annual reports on or after April 15, Beginning August 14, 2003, the certification must be provided as an exhibit to the report). Requires disclosure in Forms 20-F and 40-F of (1) the CEO's and CFO's conclusions about the effectiveness of the issuer's disclosure controls and procedures as of the end of the period covered by the report and (2) whether there were any changes in the company's internal control over financial reporting that occurred during the period covered by the report that have materially affected or are reasonably likely to materially affect the company's internal control over financial reporting. (This rule is effective for reports due on or after August 14, A slightly different disclosure requirement existed for earlier reports.) Requires issuers to maintain disclosure controls and procedures designed to ensure that all material information about the business flows to those individuals responsible for preparing the company's public disclosures.

2 3. Non-GAAP financial measures disclosures Section 401(m) of SOX Frequently Asked Questions (June 13, 2003) SEC Release No (January 22, 2003) 4. Off-balance sheet transaction disclosures Section 401(a) of SOX SEC Release No (January 27, 2003) 5. Code of ethics and waivers of code of ethics Section 406 of SOX SEC Release No A (March 26, 2003) SEC Release No (January 23, 2003) Auditors and Auditing 6. Improper influence on audits Section 303 of SOX SEC Release No (May 20, 2003) 7. Non-audit services Section 201 of SOX 8. Audit committee administration of the auditor engagement Section 202 of SOX 9. Auditor cooling off periods Section 206 of SOX 10. Auditor reports to the audit committee Section 204 of SOX Adds Regulation G, which requires the disclosure of certain information whenever an issuer publicly discloses information containing non-gaap financial measures. A foreign private issuer is exempt from Regulation G if the issuer's securities are listed or quoted outside the U.S., the non-gaap financial measures used are not derived from or based on measures using U.S. GAAP, and the disclosure is made outside the U.S. (or simultaneously worldwide). The rule also amends Form 20-F to require that certain financial information be included in any Form 20-F in which non-gaap financial measures are also included. Form 40-F has not been similarly amended, although certain Canadian reconciliation requirements may apply. Requires the MD&A section of Form 20-F and Form 40-F and registration statements on Forms F-1, F-2, F-3 and F-4 that are required to include financial statements for fiscal years ending on or after June 15, 2003 to include a discussion of any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. (Rules effective for fiscal years ending on or after June 15, 2003). Requires disclosure in Form 20-F and Form 40-F of whether or not, and if not, the reason why not, the issuer has a code of ethics applicable to its senior financial officers and chief executive officer and of changes to or waivers of such codes of ethics. (Disclosure of waivers are required on or after the date on which the company files its first annual report in which the code of ethics disclosure is required). Prohibits officers and directors, and persons acting under their direction, from, directly or indirectly, taking any action to coerce, manipulate, mislead or fraudulently influence any independent public or certified public accountant performing an audit or review of the issuer's financial statements if any such persons knew or should have known that such action could render the issuer's financial statements materially misleading. The SEC limits and clarifies the scope of non-audit services that independent accountants can provide to their audit clients. The rule does not apply to non-audit services contracted for prior to May 6, 2003 if such services are completed by May 6, (Rules effective for services contracted for on or after May 6, 2003). The SEC requires compliance with certain rules regarding the audit committee's engagement of auditors in order for auditors to be considered independent. (Rules effective for services contracted for on or after May 6, 2003). The SEC requires that for an accounting firm to be independent in respect of a fiscal year, no member of the audit engagement team may take on a financial reporting oversight role with the issuer (not including its affiliates or subsidiaries) unless that member has observed a one-year cooling off period before taking up that employment with the issuer. (Independence not impaired if employment with issuer began prior to May 6, 2003). The SEC requires that each accounting firm that performs any audit required under the securities laws for an audit client that is an issuer report to the audit committee, prior to the filing of such audit report with the SEC, all critical accounting policies and practices to be used, alternative treatments within GAAP for policies and practices related to material items, and other material written communication between the accounting firm and management. 2

3 11. Audit partner rotation Section 203 of SOX 12. Restriction on audit partner compensation Board of Directors 13. Financial expert on audit committee Section 407 of SOX SEC Release No (January 23, 2003) Ethics/Compliance 14. Attorney up-the-ladder reporting requirement A. Up-the-ladder reporting Section 307 of SOX SEC Release No (January 29, 2003) SEC Release No (January 29, 2003) (Proposal) 15. Whistleblower provisions A. New civil action Section 806 of SOX B. New felony Section 1107 of SOX Compensation 16. Loan prohibition Section 402 of SOX Lead and concurring audit partners must be rotated after no more than five years, after which they are subject to a fiveyear time-out period. Other audit partners must rotate after seven years and are subject to a two-year time-out period. (The rules apply to all audit partners of a foreign accounting firm as of the beginning of its first fiscal year after May 6, 2003, with prior time served not included for audit partners in foreign firms. For lead and concurring partners in U.S. firms, service time as lead or concurring partners prior to May 6, 2003 is included). An accountant is not independent if, at any point during the audit and professional engagement period, any audit partner earns or receives compensation based on the audit partner s procuring engagements with the audit client to provide any services, other than audit, review, or attest services. (Rules effective in fiscal periods of the accounting firm that commenced after May 6, 2003). Requires foreign private issuers to disclose in their Form 20-F or Form 40-F whether their audit committees have at least one member who is a financial expert and, if not, the reasons why it does not. The SEC requires attorneys appearing and practicing before the SEC to report any evidence of a material violation of U.S. securities law or breach of U.S. fiduciary duty or other similar violation of U.S. law to the chief legal officer and the chief executive officer or a qualified legal compliance committee. If the chief legal officer or chief executive officer fails to respond properly, the attorney must report to an appropriate committee of directors or the board of directors of the company. The rules do not apply to "non-appearing foreign attorneys." In addition, foreign attorneys practicing outside the U.S. will not be required to comply if compliance is prohibited by applicable foreign law. The SEC has deferred consideration on the noisy withdrawal requirements for attorneys and proposed an alternative reporting requirement for issuers as described below. Provides for a civil action for employees of publicly traded companies who believe they were discharged, demoted, suspended, threatened, harassed or discriminated against because they provided information or assisted in an investigation of securities fraud and related crimes. Provides for the creation of a new felony if any person knowingly takes any action harmful to any person, including interference with the employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission of any federal offense. Prohibits an issuer from, directly or indirectly, extending or maintaining credit, arranging for the extension of credit, or renewing an extension of credit, in the form of a personal loan to or for any director or executive officer of that issuer. 3

4 17. Insider trades during pension fund blackout periods A. Prohibition on insider trades Section 306(a) of SOX SEC Release No (March 27, 2003) SEC Release No (January 22, 2003) B. 30-day notice provision Section 306(b) of SOX 18. Forfeiture of certain bonuses and profits Section 304 of SOX 19. Stockholder approval of equity compensation plans SEC Release No (June 30, 2003) SEC Release No (June 30, 2003) Prohibits, through new Regulation BTR (Blackout Trading Restriction), any director or executive officer of an issuer of any equity security to, directly or indirectly, purchase or sell or otherwise acquire or transfer any equity security of the issuer during a blackout period with respect to such security, if such director or officer acquired such equity security in connection with his or her service or employment as a director or executive officer. The prohibition does not apply to blackout periods affecting plans maintained outside the U.S. primarily for the benefit of persons located outside the U.S. The prohibition only applies to blackout periods affecting plans of foreign private issuers maintained inside the U.S. if certain tests are met. For purposes of foreign private issuers, the term director means any director who is a management employee of the issuer (thereby excluding all non-management directors). The term executive officer is also narrowly defined for foreign private issuers to mean the principal executive officer or officers, the principal financial officer or officers and the principal accounting officer or officers of the issuer. SOX amended ERISA to require that plan administrators give 30-days advance written notice of blackout periods to individual account plan participants and beneficiaries. DOL regulations have been issued specifying the requirements related to the notice. Provides that, if an issuer is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws resulting from misconduct, the CEO and CFO of the issuer must reimburse the issuer for any bonus or other incentive-based or equity-based compensation received from the issuer, and any profits realized from the sale of securities. Generally requires shareholder approval for all equity compensation plans and material revisions to the terms of such plans. Also provides that broker-dealers may only give a proxy to vote on equity compensation plans if the beneficial owner of the shares provided voting instructions. (A plan adopted prior to the SEC order approving the listing standard will not be subject to shareholder approval until it is materially revised. Additional payments under "discretionary plans" and "formula plans" may be made until the first to occur of (1) after six months, the first annual meeting at which a board is elected, (2) the expiration of the plan or (3) June 30, The broker non-vote rule will be effective for any shareholder meeting occurring after September 28, 2003). Rule does not apply to foreign private issuers that have provided NYSE with home country practice certification. The Nasdaq rules are generally similar to the new NYSE rules. (A plan adopted prior to the SEC order approving the listing standard will not be subject to shareholder approval unless and until it is materially revised). Current Nasdaq rules provide that foreign issuers may be exempted if compliance would be contrary to home-country rules or generally accepted practices. Nasdaq has proposed that non-u.s. issuers disclose in their annual report each requirement from which they were exempted and describe the alternative practice, if any, of the issuer. Auditors and Auditing 20. Disclosure of audit fees Rules Effective for Annual Filing for First Fiscal Years Ending After December 15, 2003 Requires that an issuer disclose information related to audit fees, audit-related fees, tax fees and all other fees billed by the principal accountant in its Form 20-F or Form 40-F. 4

5 Disclosures 21. Contractual Obligations Section 401(a) of SOX SEC Release No (January 27, 2003) Rules Effective for Fiscal Years Ending On or After December 15, 2003 Requires disclosure of contractual obligations in tabular form in MD&A section of registration statements, annual reports and proxy or information statements that are required to include financial statements for the fiscal years ending on or after December 15, Internal controls Section 404 of SOX Rules Effective for Fiscal Years Ending On or After April 15, 2005 Requires each Form 20-F and Form 40-F to contain an internal control report which states: (1) the responsibility of management for establishing and maintaining adequate internal control over financial reporting, (2) management's assessment of the effectiveness of the issuer's internal control over financial reporting, (3) the framework used by management to make such assessment, (4) any material weaknesses identified by management in the issuer's internal control over financial reporting, and (5) that the issuer's accountants have issued an attestation report on management's assessment of the issuer's internal control over financial reporting. Disclosures 23. Audit committee disclosures SEC Release No (April 9, 2003) Auditors and Auditing 24. Audit committee independent director requirement Section 301 of SOX SEC Release No (April 9, 2003) 25. Audit committee responsibilities Section 301 of SOX SEC Release No (April 9, 2003) Rules Effective July 31, 2005 Requires enhanced disclosures regarding audit committees in Forms 20-F and 40-F, including statements of whether the issuer has a separate audit committee (or committee performing similar functions), the names of the committee members, and, if the issuer does not have a separate audit committee, that the board of directors is acting as the audit committee. If the issuer is availing itself of certain exemptions to the SEC's audit committee independence requirements, the issuer must disclose this in its report. (Compliance is required beginning with reports covering periods ending on or after the compliance date for the listing standards applicable to the issuer. Foreign private issuers must comply with the audit committee listing rules by July 31, Exchange rules must be approved by the SEC no later than December 1, 2003). Prohibits the listing of any security of an issuer that does not have an audit committee composed solely of independent directors. The rule provides an exemption for subsidiaries listing non-equity securities when the parent has listed equity securities. The rule also provides certain exceptions for foreign private issuers, which allow, among other things, nonmanagement employees as well as affiliates to be members of the audit committee. In addition, foreign private issuers with qualifying boards of auditors are exempt from the SEC requirements. Prohibits the listing of any security of an issuer that does not have an audit committee which is directly responsible for the appointment, compensation, retention and oversight of the company s auditors; has the right to hire advisors; has access to funding; and has procedures for handling complaints regarding accounting and audit practices. The rule provides an exemption for subsidiaries listing non-equity securities when the parent has listed equity securities. Foreign private issuers with qualifying boards of auditors are exempt from these requirements. (Compliance is required beginning with reports covering periods ending on or after the compliance date for the listing standards applicable to the issuer. Foreign private issuers must comply with the audit committee listing rules by July 31, Exchange rules must be approved by the SEC no later than December 1, 2003). 5

6 Disclosure 26. CEO/CFO certification 27. Additional issuer disclosure A. Nasdaq going concern opinion proposal SEC Release No (July 2, 2003) (proposal) NASD (June 11, 2002) (proposal) 28. SEC critical accounting policies SEC Release No (May 10, 2002) (proposal) 29. Repurchase of equity securities SEC Release No (December 10, 2002) (proposal) Board of Directors 30. Independent director requirement Proposed Rules Proposal would require a CEO to certify in each annual report to shareholders that the CEO is not aware of any violation by the company of the NYSE corporate governance listing standards. The CEO would also have to promptly notify the NYSE if any executive officer becomes aware of "material non-compliance" with applicable NYSE corporate governance listing standards. Foreign private issuers may follow home-country practice instead of the CEO certification aspect of these rules, but in such case must disclose any significant way in which their corporate governance practices differ from those followed by domestic companies under NYSE listing standards. Foreign private issuers must comply with the rule regarding notification of "material non-compliance" with applicable corporate governance listing standards. (Rules would be effective within six months after SEC approval). Proposal would require issuers to announce publicly the receipt of any audit opinion with a going concern qualification. Current Nasdaq rules provide that foreign issuers may be exempted if compliance would be contrary to home-country rules or generally accepted practices. Nasdaq has proposed that non-u.s. issuers disclose in their annual report each requirement from which they were exempted and describe the alternative practice, if any, of the issuer. Proposal would enhance disclosure of critical accounting policies by foreign private issuers, including basic disclosures regarding critical accounting estimates. Proposal would require disclosure in Form 20-F of information about repurchases of the issuer s equity securities, including the number of shares purchased, the average price paid per share, the number of shares purchased as part of a publicly announced program, and the maximum number or approximate dollar value of shares that may yet be purchased under such program. Proposal would require, among other things, that a majority of directors be independent, that non-management directors meet regularly in executive session without management, and that the board affirmatively determine that a director has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). (Rules would be effective 18 months after SEC approval (30 months for certain issuers with classified boards). Executive session requirement would be effective six months after SEC approval). Foreign private issuers may follow home-country practice instead of this proposed rule, but in such case must disclose any significant way in which their corporate governance practices differ from those followed by domestic companies under NYSE listing standards. Proposal would require, among other things, that a majority of directors be independent, that independent directors meet regularly in executive session, and that the board conclude that a director does not have a relationship that would interfere with the exercise of independent judgment. (Rule would be effective 18 months after SEC approval (30 months for certain issuers with classified boards) except for the executive session provision which would be effective six months after SEC approval). Current Nasdaq rules provide that foreign issuers may be exempted if compliance would be contrary to homecountry rules or generally accepted practices. Nasdaq has proposed that non-u.s. issuers disclose in their annual report each requirement from which they were exempted and describe the alternative practice, if any, of the issuer. 6

7 31. Nominating committee 32. Compensation committee 33. Audit committee independent director requirement Proposal would require that listed companies, other than controlled companies, have a nominating/corporate governance committee composed entirely of independent directors and require the committee to have a written charter that addresses specified topics, including annual performance evaluations of the committee. (Rules would be effective six months after SEC approval except for director independence requirements, which would be effective 18 months after SEC approval (30 months for certain issuers with classified boards)). Foreign private issuers may follow home-country practice instead of the nominating committee requirements under this rule, but in such case must disclose any significant way in which their corporate governance practices differ from those followed by domestic companies under NYSE listing standards. Proposal would not require a nominating committee. It would allow directors to be nominated by either a nominating committee consisting of only independent directors or by a majority of independent directors, except where the right to nominate a director legally belongs to a third party. (Rule would be effective after first annual meeting after January 1, 2004). Current Nasdaq rules provide that foreign issuers may be exempted if compliance would be contrary to homecountry rules or generally accepted practices. Nasdaq has proposed that non-u.s. issuers disclose in their annual report each requirement from which they were exempted and describe the alternative practice, if any, of the issuer. Proposal would require that listed companies, other than controlled companies, have a compensation committee composed entirely of independent directors and require the committee to have a written charter that addresses specified topics, including annual performance evaluations of the committee. (Rules would be effective six months after SEC approval except for director independence requirements, which would be effective 18 months after SEC approval (30 months for certain issuers with classified boards)). Foreign private issuers may follow home-country practice instead of the compensation committee requirements under this rule, but in such case must disclose any significant way in which their corporate governance practices differ from those followed by domestic companies under NYSE listing standards. Proposal would not require a compensation committee. Compensation of executive officers could be determined either by a compensation committee of only independent directors (such committees must meet in executive session if determining CEO compensation) or by a majority of independent directors (such directors must meet in executive session if determining CEO compensation). (Rule would be effective after first annual meeting after January 1, 2004). Current Nasdaq rules provide that foreign issuers may be exempted if compliance would be contrary to home-country rules or generally accepted practices. Nasdaq has proposed that non-u.s. issuers disclose in their annual report each requirement from which they were exempted and describe the alternative practice, if any, of the issuer. Similar to Section 301 of SOX (see 24 above), proposal would require that listed companies have an audit committee comprised of at least three independent directors meeting certain requirements. (Rules would be effective 18 months after SEC approval (30 months for certain issuers with classified boards), unless otherwise required by SEC rules). Proposal would require audit committees to have at least three members all of whom meet specified independence requirements. (Rule would be effective after first annual meeting after January 1, 2004, unless otherwise required by SEC rules). The Nasdaq rules will need to incorporate the various exceptions provided by the SEC for foreign issuers in the SEC's audit committee rules. 7

8 34. Audit committee responsibilities Ethics/Compliance 35. Code of ethics code of ethics code of ethics SEC Release No (July 2, 2003) (proposal) SR-NASD Amendment I (January 15, 2003) (proposal) 36. Attorney up-the-ladder reporting requirement A. Noisy withdrawal SEC Release No (January 29, 2003) SEC Release No (November 21, 2002) Other 37. Rule 10b-18 Modifications SEC Release No (December 10, 2002) (proposal) 38. Impact on foreign private issuers listing requirements Similar to Section 301 of SOX (see 25 above), proposal would require that the audit committee meet certain requirements, including having sole authority to hire and fire auditors, and discuss certain matters within the committee or with auditors or management and sole authority to appoint, determine funding for and oversee outside auditors and reinstatement. (Rule would be effective within six months after SEC approval or as otherwise required by SEC rules). Proposal would require that the audit committee charter specify certain of the committee s duties. (Rules would be effective six months after SEC approval or as otherwise required by SEC rules). The Nasdaq rules will need to incorporate the various exceptions provided by the SEC for foreign issuers in the SEC's audit committee rules. Proposal would require all listed companies to adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of such code for directors or executive officers. Foreign private issuers may follow home-country practice instead of the code of business conduct and ethics requirements under this rule, but in such case must disclose any significant way in which their corporate governance practices differ from those followed by domestic companies under NYSE listing standards. Proposal would require each issuer to adopt a publicly available code of conduct applicable to all directors, officers and employees and approve and disclose any waivers of such code for directors or officers. Current Nasdaq rules provide that foreign issuers may be exempted if compliance would be contrary to home-country rules or generally accepted practices. Nasdaq has proposed that non-u.s. issuers disclose in their annual report each requirement from which they were exempted and describe the alternative practice, if any, of the issuer. (Compliance would be required six months after SEC approval). New proposal would require an attorney who had reported evidence of a material violation "up-the-ladder" to either withdraw (if retained by the issuer) or cease participating in any matter concerning a potential violation (if employed by the issuer) if the attorney (i) did not receive a timely and appropriate response in a reasonable time and (ii) had reasonably concluded that there is substantial evidence that a material violation is occurring or is about to occur that is likely to cause substantial injury to the interests of the issuer or investors. An attorney retained by the issuer would be required to withdraw from such representation and notify the issuer, in writing, that the withdrawal was due to professional considerations. An attorney employed by the issuer would be required to cease forthwith any participation in any matter concerning the violation and to notify the issuer in writing that the issuer had not provided a timely and appropriate response to the report of evidence of a material violation. The issuer would be required publicly to disclose receipt of any attorney notices required by this rule on Form 20-F or Form 40-F within two business days (e.g., the Form 20-F or 40-F would function as a Form 8-K does for domestic issuers for this limited purpose). Proposal would amend Rule 10b-18, which provides a non-exclusive safe harbor from liability for market manipulation in connection with purchases of common equity by an issuer, to modify the maximum amount of stock that can be purchased in a trading day, the times of day during which the issuer can repurchase stock and the highest price that an issuer may pay for such repurchased stock. Foreign private issuers would generally be required to satisfy NYSE audit committee independence, composition and responsibility standards. Otherwise, home-country corporate governance provisions would be applicable. Proposal would require listed foreign private issuers to disclose any significant ways in which their home-country corporate governance practices differ from those required by the NYSE. (Rule would be effective six months after SEC approval). 8

9 listing requirements SEC Release No (proposal) (July 2, 2003) NASD (proposal) (October 8, 2002) Nasdaq currently provides that nothing in the Nasdaq listing requirements should be construed to require a foreign issuer to do anything contrary to its home country law or generally accepted business practices, and Nasdaq is authorized to provide exemptions to carry out this intent. Under Nasdaq s new proposal, non-u.s. issuers would have to disclose in their annual report each requirement from which they were exempted and describe the alternative practice, if any, of the issuer in lieu of these requirements. In addition, foreign issuers making their initial public offering or first U.S. listing on Nasdaq would be required to disclose any such exemptions in their registration statement. (Rule would be effective after January 1, 2004). New York Laraine S. Rothenberg Michael Levitt London Timothy E. Peterson ffny01\machade\