in Rule 144A offerings by non-U.S. companies is to provide financial statements pre-
pared in accordance with home country GAAP, and not to reconcile those financial
statements to U.S. or international GAAP. In most cases, however, a summary of ma-
terial differences between home country and U.S. GAAP is provided.
(c) Multijurisdictional Disclosure System and other Reciprocal Initiatives.
(i) Concept Release. In February 1985, in response to the multijurisdictional secu-
rities offerings discussed above and the increasing internationalization of the securi-
ties markets, the SEC published a “concept release,” soliciting public comment on ef-
forts to harmonize disclosure and distribution practices for multinational offerings.
The SEC suggested two possible approaches that would facilitate such offerings. The
first, referred to as the “reciprocal” approach, would involve agreement by two or
more participating regulating bodies that disclosure documents prepared in accor-
dance with the disclosure standards of other participating regulators would be auto-
matically accepted as meeting their own disclosure requirements. The second, de-
scribed as the “common prospectus” approach, would involve participating
regulators agreeing upon common disclosure standards for a prospectus that would
be simultaneously filed with the regulator of each jurisdiction in which an offer was
made. The SEC suggested in the concept release that Canada and the United King-
dom were the most obvious partners in the development of such a system, on the
grounds that their disclosure requirements and their accounting standards were
largely comparable to those of the United States. Comments received by the SEC in
response to the concept release overall were in favor of the idea of facilitating multi-
national offerings. Most commenters thought that, while a common prospectus would
be ideal in theory, it would be difficult to work with in practice, so the reciprocal ap-
proach was hailed as a more practical solution.
Many of the commenters on the concept release expressed views on accounting is-
sues in a wider context (i.e., with respect to countries other than the United Kingdom
and Canada). Of those commenters expressing a view as to whether reconciliation to
U.S. GAAP was necessary for financial statements used in multinational offerings,
opinion was split. Approximately half favored reconciliation to U.S. GAAP, although
some of these comments were founded on the fact that some countries’ GAAP do not
conform to IASC standards. Others felt that no reconciliation would be necessary (a
view that came to be held by a majority of commenters on the U.S.–Canadian system
discussed below). Several stated that IASC standards should serve as the GAAP for
multinational offerings. Most commenters expressing an opinion on the subject were
in favor of some indication or warning in disclosure documents that foreign issuers’
accounting standards were different from those of the United States.
The concept release asked commenters what the role of the SEC should be in en-
couraging multinational offerings. The majority of commenters on this point favored a
proactive role by the SEC, with the Commission either taking a leading role in actively
encouraging such offerings or identifying and removing barriers to multinational of-
ferings without compromising investor protection. It is important to note, then, that the
SEC has not yet been taking action in this area without significant backing and en-
couragement from U.S. securities issuers, intermediaries, and professional advisers.
(ii) U.S.-Canadian Multijurisdictional Disclosure System. Subsequent to the concept
release, the SEC began two years of discussions with the securities commissions of
14.5 RESPONSE TO GLOBALIZATION 14 • 13