Professor Lash on Deregistration Requirements for Foreign Companies

"Thanks to some overly strict regulation, our markets seem like the Hotel California of the famous Eagles song: a place you can 'check out any time you like, but you can never leave,'" states Professor William Lash in a Washington Times op-ed concerning the difficulties foreign private firms face with stringent deregistration requirements in the United States.

Lash goes on to say, "Overall, deregistration requirements should not focus on impractical head counts of U.S. investors. A functioning deregistration policy should concentrate on investor protection at all stages, including after deregistration.

"But a flexible deregistration system must also take into consideration factors such as quality of disclosure, financial information and the existence of other transparent, efficient and liquid markets where U.S. investors can trade the securities of the foreign firm. This flexibility is what issuers and global markets require. Where the trading price of a security is determined primarily in a sophisticated, transparent market outside of the United States, deregistration should be applied more flexibly. Conversely, where deregistration would deny shareholders the protection and benefits of high-quality disclosure and an efficient capital market, exit rules should be more rigidly applied."

Reforming deregistration SEC should make major fix, The Washington Times, April 26, 2006. By William H. Lash III.

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