Harmonization of securities disclosure rules in the global market - A proposal

Fordham Law Review

Volumn 66, Issue 5, 1998, Pages 1785-1835

  Geiger, Uri ^a,b  

^a Howard Hughes Medical Institute   (United States)

^b Sullivan and Cromwell   (United States)

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[No Author keywords available]

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EID: 0032378332     PISSN: 0015704X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (313)

1. Office of International Corporate Finance of the U.S. Securities and Exchange Commission, Foreign Companies Registered and Reporting with the U.S. Securities and Exchange Commission (Dec. 31, 1997).
2. G. Andrew Karolyi, What Happens to Stocks that List Shares Abroad? A Survey of the Evidence and its Managerial Implications, NYSE Working Paper 96-04, Sept. 1996, at 36.
3. Office of the Secretary, U.S. Department of Treasury, Treasury Bulletin, table CM-V-5 (March 1997).
4. See, e.g., Uri Geiger, The Case for the Harmonization of Securities Disclosure Rules in the Global Market, 1997 Colum. Bus. L. Rev. 241 (utilizing various economic theories to support the argument that harmonization is the most efficient approach for regulating securities disclosure rules in the global market).
5. The international disclosure standards [hereinafter the IOSCO Proposal] are accompanied by a proposed timetable based upon endorsement of the IOSCO Proposal by the member states by fall 1998, and thereafter implementation of the standards into the domestic law of the member states, including the U.S. (on file with the author). See also U.S. Securities and Exchange Commission, Current Issues and Rulemaking Projects (visited Feb. 25, 1998) 〈http://www.sec.gov/rules/othern/ cfcr0298.html〉 (describing the development of international standards and the rulemaking process).
6. The concept of the IOSCO Proposal is different from that of this paper. The IOSCO Proposal does not call for the harmonization of securities disclosure rules; instead, it suggests the creation of international disclosure standards to be used only for cross-border offering and listing. For further discussion of the conceptual differences, see infra part II.B.
7. The term "Global Prospectus" is used to describe the prospectus which would be prepared pursuant to the harmonized standards.
8. Andreas J. Roquette, New Developments Relating to the Internationalization of the Capital Markets: A Comparison of Legislative Reforms in the United States, the European Community, and Germany, 14 U. Pa. J. Int'l Bus. L. 565, 571 (1994).
9. Directives are rules adopted by the EU Council which must be implemented by legislation into each member state's domestic law. Id. at 587-88.
10. David Reid & Andrew Ballheimer, The Legal Framework of the Securities Industry in the European Community Under the 1992 Program, 29 Colum. J. Transnat'l L. 103, 124 (1991) (describing the development of the EU harmonization program).
11. For a discussion of the mutual recognition procedure, see infra text accompanying notes 18-19.
12. See Joel P. Trachtman, Unilateralism, Bilateralism, Regionalism, Multilateralism, and Functionalism: A Comparison with Reference to Securities Regulation, 4 Transnat'l L. & Contemp. Probs. 69, 96 (1994).
13. Due to the nature and scope of this work, only the Listing Particular Directive and the Mutual Recognition Directive are discussed in detail. For a comprehensive discussion of all of the directives which relate to the issuance of and trading in securities in the EU, see Manning Gilbert Warren III, Global Harmonization of Securities Laws: The Achievements of the European Communities, 31 Harv. Int'l L.J. 185, 209-21 (1990).
14. Council Directive No. 79/279, 1979 O.J. (L 66) 21 [hereinafter the Admissions Directive].
15. Council Directive No. 80/390, 1980 O.J. (L 100) 1 [hereinafter the Listing Particular Directive].
16. Id. at (L 100) 11.
17. Id. at (L 100) 2.
18. Council Directive No. 87/345, 1987 O.J. (L 185) 81 [hereinafter Mutual Recognition Directive].
19. Mutual recognition is subject only to translation and the incorporation of limited additional information concerning tax systems, paying agents, and the way notices are to be delivered to investors in the member state where recognition is sought. Id. at (L 185) 82.
20. Council Directive No. 82/121, 1982 O.J. (L 48) 26.
21. The requirements for the publication of an annual report are listed in the Fourth Company Law Directive which applies to every company incorporated within the EU. See Council Directive No. 78/660, 1978 O.J. (L 222) 11.
22. Council Directive No. 98/298, 1989 O.J. (L 124) 8.
23. Warren, supra note 13, at 231 (stating that the EU chose "harmony now" at the price of "discord later").
24. Id. at 213 (exploring the mutual influence of the minimum standards and the mutual recognition approach).
25. Reid & Ballheimer, supra note 10, at 126 (describing how the LSE relaxed its listing requirements).
26. Id. at 144.
27. See, e.g., Roquette, supra note 8, at 598 (stating that the lack of an institutional mechanism for coordination and enforcement reduces the chance for efficient and effective harmonization); Warren supra note 13, at 231 (suggesting the establishment of a supernational regulatory body to ensure the coordination and enforcement of the regulatory system).
28. Multijurisdictional Disclosure and Modifications to the Current Registration and Reporting System for Canadian Issuers, Securities Act Release No. 6902, [1991 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 84,812, at 81,860 (July 1, 1991) [hereinafter the MJDS Release].
29. When adopting the MJDS, the SEC indicated its intention to extend it to other foreign countries such as the United Kingdom and Japan. See Edward E. Green et. al., U.S. Regulation of the International Securities and Derivatives Markets 8-5 (3d ed. 1995).
30. Id. at 8-3 to 8-4 n.1 (explaining how the equality of Canadian and U.S. requirements was achieved).
31. Cally Jordan, Regulation of Canadian Capital Markets in the 1990s: The United States in the Driver's Seat, 4 Pac. Rim L. & Pol'y J. 577, 592 (1995).
32. Id. at 592-93 (describing the Americanization of the Canadian disclosure system).
33. For a full discussion of the conditions for using the MJDS, see Green, supra note 29, at 8-6 to 8-12.
34. 17 C.F.R. § 239.40 (1997).
35. The MJDS Release, supra note 28, at 81, 880-81.
36. Id.
37. Id. at 81, 866.
38. The development of the MJDS took six years, see Green, supra note 29, at 8-3 n.1.
39. An additional reason might be the fact that until 1997 the United Kingdom securities market was regulated by a private organization (the LSE) which the SEC did not find to be an appropriate contra party for multinational disclosure agreement.
40. As of March 1995, only $3 billion had been raised in MJDS equity offerings. In contrast, $13 billion had been raised in MJDS debt offerings. See Green, supra note 29, at 8-39 to 8-40 nn.112 & 114.
41. Jordan, supra note 31, at 591.
42. Trachtman, supra note 12, at 95.
43. A similar pattern was followed by the SEC when it initiated the development of the MJDS. The first step was the publication of a concept release requesting comments on two alternative approaches to facilitate multinational offerings: the reciprocal approach and the common prospectus approach. See Facilitation of Multinational Securities Offering, Securities Act Release No. 6568, [1984-1985 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 83,743, at 87,318 (Feb. 28, 1985) [hereinafter Multinational Offerings Release].
44. Warren, supra note 13, at 191.
45. Multinational Offerings Release, supra note 43, at 87,322.
46. James D. Cox, Rethinking U.S. Securities Laws in the Shadow of International Regulatory Competition, 55 Law & Contemp. Probs. 157, 179 (1992) (describing situations in which the United States should defer to other countries' securities regulations); Warren, supra note 13, at 191-93 (describing the use of reciprocity in EU harmonization and in connection with the MJDS).
47. Warren, supra note 13, at 191-92.
48. For the names of the countries that would participate in the harmonization process, see infra note 59.
49. Multinational Offerings Release, supra note 43, at 87,323.
50. See supra text accompanying note 24.
51. The IASC-U.S. Comparison Project: A Report on the Similarities and Differences Between IASC Standards and U.S. GAAP 4 (Carrie Bloomer ed., 1996) (stating that reciprocity introduces noncomparability and precludes firms from competing on a level playing field) [hereinafter IASC-U.S. Comparison Project].
52. See supra part I.A.
53. See supra part I.B.
54. For a detailed discussion of the benefits of common standards, see Geiger, supra note 4, at 297-312.
55. See Lawrence J. White, Competition Versus Harmonization - An Overview of International Regulation of Financial Services, in International Financial Markets: Harmonization Versus Competition 5, 39 (Claude E. Barfield ed., 1996) (describing the savings in transaction costs that would result from harmonization and comparing the diversity of disclosure rules to a situation in which each of the 50 states had its own accounting standards); Joel P. Trachtman, International Regulatory Competition, Externalization, and Jurisdiction, 34 Harv. Int'l L.J. 47, 66-67 (1993) (describing the economies of scale which are created when one set of rules governs a broad class of transactions); David Mercado, Evolving Accounting Standards in the International Markets, 961 PLI/CORP 343, 348 (1996), available in Westlaw, PLI-CORP File (explaining how investors' and analysts' familiarity with one international standard facilitates the ease with which they understand the disclosure document).
56. See Lawrence J. White, Competition Versus Harmonization - An Overview of International Regulation of Financial Services, in International Financial Markets: Harmonization Versus Competition 5, 39 (Claude E. Barfield ed., 1996) (describing the savings in transaction costs that would result from harmonization and comparing the diversity of disclosure rules to a situation in which each of the 50 states had its own accounting standards); Joel P. Trachtman, International Regulatory Competition, Externalization, and Jurisdiction, 34 Harv. Int'l L.J. 47, 66-67 (1993) (describing the economies of scale which are created when one set of rules governs a broad class of transactions); David Mercado, Evolving Accounting Standards in the International Markets, 961 PLI/CORP 343, 348 (1996), available in Westlaw, PLI-CORP File (explaining how investors' and analysts' familiarity with one international standard facilitates the ease with which they understand the disclosure document).
57. See Lawrence J. White, Competition Versus Harmonization - An Overview of International Regulation of Financial Services, in International Financial Markets: Harmonization Versus Competition 5, 39 (Claude E. Barfield ed., 1996) (describing the savings in transaction costs that would result from harmonization and comparing the diversity of disclosure rules to a situation in which each of the 50 states had its own accounting standards); Joel P. Trachtman, International Regulatory Competition, Externalization, and Jurisdiction, 34 Harv. Int'l L.J. 47, 66-67 (1993) (describing the economies of scale which are created when one set of rules governs a broad class of transactions); David Mercado, Evolving Accounting Standards in the International Markets, 961 PLI/CORP 343, 348 (1996), available in Westlaw, PLI-CORP File (explaining how investors' and analysts' familiarity with one international standard facilitates the ease with which they understand the disclosure document).
58. See Richard C. Breeden, Foreign Companies and U.S. Securities Markets in a Time of Economic Transformation, 17 Fordham Int'l L.J. S77, S88-S89 (1994) (explaining the importance of comparability); Mercado, supra note 55, at 348 (explaining that having one set of standards will make possible a much more systematic comparison of companies around the world).
59. Multinational Offerings Release, supra note 43, at 87,323.
60. IOSCO Proposal, supra note 5, although not meant to replace domestic disclosure requirements, is another example of the feasibility of creating an agreed upon international standard.
61. The following nations which are currently involved in the creation of international disclosure standards within the framework of IOSCO are potential candidates for participation in the first stage of harmonization: Australia, Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, Luxembourg, the Netherlands, Spain, Switzerland, the United Kingdom and the United States [hereinafter "Major Markets"].
62. See infra text accompanying notes 78-80.
63. For a discussion of the voting mechanism of the Global Coordinator, see infra part II.D.2.
64. In the U.S., certain non-reporting issuers can raise up to $5 million in aggregate during any 12 month period without registration. See Regulation A - Conditional Small Issuers Exemption, 17 C.F.R. § § 230.251-63 (1997).
65. The specific details of these exemptions are to be determined in the negotiation process.
66. Unless otherwise stated, the term "multinational offering" refers to an offering or listing of securities conducted in one or more markets other than the issuer's home market.
67. See supra note 5. One should note, however, that the IOSCO Proposal can serve as a first step toward a full scale harmonization.
68. For a detailed description of issuers' benefits from harmonization, see Geiger, supra note 4, at 306-07.
69. See Breeden, supra note 56, at S88 (arguing that having lower disclosure standards for foreign issuers might put U.S. firms at a competitive disadvantage); Louis Lowenstein, Financial Transparency and Corporate Governance: You Manage What You Measure, 96 Colum. L. Rev. 1335, 1338 (1996) (arguing that if the SEC lowers standards radically for foreign issuers, domestic issuers will demand equal treatment).
70. A short form cross-border registration procedure based upon domestic disclosure was adopted in the EU in 1994. See Council Directive No. 94/18, 1994 O.J. (L 135) 1.
71. IASC-U.S. Comparison Project, supra note 51, at 5. In fact, even investors who invest only in local markets would have to bear the costs of becoming familiar with the international disclosure standards which would be used by foreign issuers in the investors' domestic market.
72. Breeden, supra note 56, at S88-S89.
73. See Geiger, supra note 4, at 307-10 (showing how the harmonization could significantly reduce the cost of capital and improve comparability).
74. Id. at 309-10 (explaining how using harmonized standards would improve the operation of markets worldwide).
75. See, e.g., Securities Act Industry Guides, 1 Fed. Sec. L. Rep. (CCH) ¶ 3825-31, at 3311 (July 15, 1996) (stating specific disclosure requirements for certain industries).
76. For a detailed discussion of the content of the Global Prospectus, see infra part III.
77. For a description of the IAS and a comparison of the new standards with U.S. GAAP, see IASC-U.S. Comparison Project, supra note 51 (presenting a study prepared by the Financial Accounting Standards Board).
78. There will be no need to translate a Basic Form prepared in English if the competent authority in the host market authorizes the use of English language prospectuses in cross-border offerings. The term "host market" refers to any market, other than the issuer's home market, in which securities are publicly offered.
79. For a discussion of the additional information to be provided in the Global Form, see infra part III.D.2.
80. The need to rely on the review process of other authorities is another justification for limiting the applicability of the proposed rules to developed markets, which are supervised by reliable regulatory bodies. See supra text accompanying notes 60-61.
81. For U.S.-only offerings, the MJDS allows Canadian issuers to designate any review jurisdiction in Canada. Green, supra note 29, at 8.02[2]. In the EU, when an offering is conducted in several markets outside of the issuer's home market, the issuer can engage in regulatory arbitrage by choosing a "convenient" competent authority to conduct the review process. See Warren, supra note 13, at 213.
82. In the Global Form, issuers would have to disclose any material changes from the date of authorization of the Basic Form until the date the Global Form goes into effect in the host market. See infra text accompanying note 247.
83. The idea of local regulatory authorities relying on a foreign authority's review process is likely to raise resistance by many organizations. For a discussion of this issue, see infra text accompanying notes 306-08.
84. For a discussion of the dispute-resolution mechanism, see infra part II.D.3.
85. The leading candidate to serve as the "Global Coordinator" is the IOSCO. The IOSCO is a private organization encompassing representatives of securities regulators from more than 100 countries, including the regulatory agencies of all the major financial centers. The IOSCO serves as the principal forum for the study and discussion of international securities regulation. See, e.g., Paul Guy, Regulatory Harmonization to Achieve Effective International Competition, in Regulating International Financial Markets: Issues and Policies 291 (Franklin R. Edward & Hugh T. Patrick eds., 1992) (providing a general overview of IOSCO). However, as discussed below, the IOSCO's limited powers, structure, and weak decision-making mechanism make it, in its current form, unsuitable to serve as the Global Coordinator.
86. John P. Fitzpatrick, The Future of the North American Free Trade Agreement: A Comparative Analysis of the Role of Regional Economic Institutions and the Harmonization of Law in North America and Western Europe, 19 Hous. J. Int'l L. 1, 6 (1996) (expressing the need for an organization with the power to develop and harmonize legal regimes and enforce compliance with regional law).
87. Winfried Lang, Institutional Development and Linkages - A Response, in Creating a European Economic Space: Legal Aspects of EC-EFTA Relations 105, 105 (Mary Robinson & Jantien Findlater eds., 1989). Since the harmonization of disclosure rules would result in a high degree of integration of securities markets, it is useful to analyze current models of economic integration.
88. Fitzpatrick, supra note 84, at 23 (identifying the essential powers of the institutional mechanism).
89. The EU does have separate decision-making and judicial institutions. However, there is no institution which is designated to monitor the implementation and enforcement of the EU harmonization plan. For a general discussion of the institutional structure of the EU, see Dominick Lasok & John W. Bridge, Law and Institutions of the European Communities (5th ed. 1991).
90. Thomas J. Dillon, Jr., The World Trade Organization: A New Legal Order for World Trade?, 16 Mich. J. Int'l L. 349, 354 (1995) (describing the effect of GATT's lack of an institutional framework).
91. Fitzpatrick, supra note 84, at 61-62 (exploring the role of a decision-making institution). In fact, "[n]o regional group without the type of centralized decision-making structure of the EU has yet been successful in fully integrating separate sovereign state economic systems." Frederick M. Abbott, Interpretation Without Institutions: The NAFTA Mutation of the EC Model and the Future of the GATT Regime, 40 Am. J. Comp. L. 917, 945 (1992).
92. Guy, supra note 83, at 296-97 (describing the structure of IOSCO).
93. Dillon, supra note 88, at 365-66 (describing the decision-making mechanism of the WTO).
94. Id. at 365.
95. This gives a veto power to the five permanent members of the Security Council. Department of Public Information United Nations, Basic Facts About the United Nations 11 (1992).
96. This unanimity was required pursuant to Article 100 of the Treaty of Rome. See Treaty Establishing the European Economic Community and Connected Documents, Mar. 25, 1957, 298 U.N.T.S. 11.
97. Louis F. Del Duca, Teachings of the European Community Experience for Developing Regional Organizations, 11 Dick. J. Int'l L. 485, 500 (1993) (discussing the effects of the unanimity requirement of Article 100 of the Treaty of Rome).
98. Id. at 502-04 (describing the "Qualified Majority Approximation"). A unanimous vote is still required for certain issues involving the movement of persons and employee rights.
99. Id. at 503.
100. The determination of market capitalization would have to take into account corporations that trade in more than one market.
101. A similar mechanism was adopted in the EU; it enables six of the seven smaller nations in the EU to block a proposal by the larger nations. Del Duca, supra note 95, at 503.
102. Such quasi-judicial decisions would be subject to appeal before the dispute-resolution mechanism.
103. The independence of the monitoring institution's member would negate the need for an internal voting mechanism based on nationality.
104. See Lasok & Bridge, supra note 87, at 214-15.
105. Del Duca, supra note 95, at 494-95 (exploring the institutional framework of the EU).
106. Lasok & Bridge, supra note 87, at 214-15.
107. See, e.g., Fitzpatrick, supra note 84, at 78, 83 (describing the judicial institutions of EFTA-EEA and NAFTA); Philip M. Nichols, Extension of Standing in World Trade Organization Disputes to Nongovernment Parties, 17 U. Pa. J. Int'l Econ. L. 295, 321-26 (1996) (comparing the dispute-resolution mechanisms of the WTO and the EU).
108. In connection with the IAS, the SEC has already made its endorsement of the rules conditional on the creation of a mechanism which would guarantee rigorous interpretation. See SEC Statement Regarding International Accounting Standards, SEC News Digest 96-67.
109. See supra part II.C.2.
110. In the United States, the concept of materiality is reflected in Section 11's liability for prospectuses that contain an untrue statement of material fact or omit a material fact required to be stated therein or is necessary to make the statement therein not misleading. See 15 U.S.C.A. § 77k (West 1997). A fact is considered material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision. See TSC Indust., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976).
111. In the United States, investors have a private right of action against issuers and certain other parties that fail to meet their disclosure obligations. An analysis of the method used to enforce securities laws in different nations and the problems related to enforcement against foreign companies is beyond the scope of this article. For a discussion of enforcement in the Internet era, see John C. Coffee, Jr., Brave New World?: The Impact(s) of the Internet on Modern Securities Regulation, 52 Bus. Law. 1195 (1997).
112. This proposal sets forth the author's views on how multinational negotiations on harmonized disclosure rules might conclude. In the real world, the development and implementation of these standards would face many obstacles. For an overview of some of the problems with harmonization, see infra part IV.
113. The IOSCO is expected to vote in fall 1998 on a proposed draft of international disclosure rules. Those rules, however, are to be used only for cross-border offerings. See IOSCO Proposal, supra note 5.
114. The proposed rules do not cover offerings by small businesses, offerings which do not involve listing on an exchange, or offerings by companies in specialized industries (such as banking, mining, etc.). See discussion supra part II.B.
115. The comparison includes mainly the disclosure requirements of the United States, Japan, and the United Kingdom (LSE); United Kingdom rules are similar to those of the EU Listing Particular. In addition, references are made to the disclosure regimes of Australia, Belgium, Canada, France, Germany, Hong Kong, Italy, Luxembourg, the Netherlands, Spain, and Switzerland. The analysis is based on the regulation of the Major Markets and on information included in the Comparative Analysis of Disclosure Regimes prepared by Working Party No.1 of the Technical Committee of the IOSCO. See International Organization of Securities Commissions, Comparative Analysis of Disclosure Regimes (1991) (available through the IOSCO's web site at 〈http://www.iosco.org〉) [hereinafter CADRE].
116. 17 C.F.R. § 229 (1997) [hereinafter Regulation S-K].
117. See, e.g., Shahrokh M. Saudagaran & Gary C. Biddle, Financial Disclosure Levels and Foreign Stock Exchange Listing Decisions, 4 J. Int'l Fin. Mgmt. & Acct. 106, 124-25 (1992) (presenting a survey of 142 market participants who ranked the U.S. reporting requirements as the most stringent among all Major Markets).
118. Another reason for using Regulation S-K as a basis for comparison is that the American reader is already familiar with the structure of Regulation S-K.
119. For a discussion of the IAS, see IASC-U.S. Comparison Project, supra note 51.
120. Currently, the United States is the only major market which requires issuers to furnish quarterly reports. See Cox, supra note 46, at 187. Furthermore, several commentators suggest that the requirement to disclose financial information on a quarterly basis increases share volatility, focuses management on short term profits rather than long term investments, and puts U.S. companies at a competitive disadvantage to non-U.S. companies, which are not subject to mandatory quarterly reporting. See, e.g., Bruce Alan Mann, Reexamining the Merits of Mandatory Quarterly Reporting, Insights, Apr. 1992, at 3-4.
121. International Organization of Securities Commissions, International Equity Offers 7 (1989) (available through the IOSCO's web site at 〈http://www.iosco.org〉).
122. Id. at 8. Some countries, such as Canada, use a certain degree of merit review in addition to disclosure to achieve the goal of protecting investors.
123. See, e.g., Regulation S-K, supra note 114 (listing U.S. reporting requirements).
124. CADRE, supra note 113, at 3-4 (exploring differences in disclosure systems among the Major Markets).
125. Similar disclosure is required in the United States, pursuant to 17 C.F.R. § 230.421 (1997).
126. CADRE, supra note 113, at 9.
127. For a description of the new IAS, see IASC-U.S. Comparison Project, supra note 51. Those standards will not be discussed in this paper.
128. 17 C.F.R. § 229.101(a) (1997).
129. Id.
130. Securities Registration Statement - Instruction for Completion § 19(2), translation of Form 7 prepared by Nomura Securities (on file with author) [hereinafter Form 7]. Form 7 is used by foreign corporations which offer their securities publicly in Japan. The content of Form 7 is similar to that of Form 2, which is used by domestic companies except for the sections that refer to financial statements.
131. Id. § 20(1)(c).
132. In the United Kingdom, the disclosure requirements are set out in chapter 6 of the London Stock Exchange Listing Rules (1997) [hereinafter Yellow Book].
133. Id. § 6.G.1(a). Trend information is required in particular with respect to (a) the most significant trends in production, sales, stocks, and the state of the order book, and (b) recent trends in costs of selling prices. Id. 132. Id. § 6.G.1(b). This information requirement is unique to the United Kingdom and is not required in accordance with the equivalent clause of the EU Listing Particular.
134. Whenever information on interim periods following the most recent complete fiscal years would be required in the financial statements, narrative disclosure for the same period would be provided in the Global Prospectus.
135. 17 C.F.R. § 229.101(a)(1) (1997); Form 7, supra note 128, §§ 14(2), 19(2) (Japan); Yellow Book, supra note 130, §§ 6.C.3, 6.C.4 (United Kingdom).
136. Information on the internal corporate governance system should focus on shareholder rights, the board of directors and the allocation of power between the shareholders and the board of directors. Information concerning relevant legislation in the country where the issuer is incorporated would be provided in another section of the Global Prospectus. See infra text accompanying note 241.
137. 17 C.F.R. § 229.101(a)(1) (1997). A subsidiary is defined as significant if the issuer's investment in or advances to the subsidiary exceeds 10% of the issuer's total consolidated assets, or if the issuer's equity in the subsidiary's income from continuing operations exceeds 10% of the issuer's consolidated income from continuing operations. 17 C.F.R. §§ 210.1-02(w)(1), (3) (1997).
138. CADRE, supra note 113, at 24.
139. Yellow Book, supra note 130, § 6.D.9.
140. 17 C.F.R. § 229.101(a)(1) (1997).
141. Form 7, supra note 128, § 19(2). In addition, if the company has merged or entered into a contract for merger during the period from the beginning of the business year to the filing date, the issuer is required to explain the purpose and terms of the merger. Id. § 20(2)(a).
142. Yellow Book, supra note 130, § 6.D.5.
143. Id. § 6.C.22.
144. See infra text accompanying notes 191-93.
145. 17 C.F.R. § 229.101(a)(1) (1997). In addition to the narrative disclosure, the issuer has to submit financial statements, including Pro Forma reports of significant acquisitions. 17 C.F.R § 210.3-05 (1997).
146. CADRE, supra note 113, at 22.
147. Id. at 23.
148. Id. at 22.
149. Yellow Book, supra note 130, § 6.D.11.
150. Id. § 6.D.12. Information concerning principal investments must cover future investments on which the issuer's directors have already made firm commitments. Id. § 6.D.13.
151. Research and development investments are to be described as part of the description of the issuer's business. See infra text accompanying notes 161-66.
152. 17 C.F.R. § 229.101 (c) (1997).
153. Form 7, supra note 128, § 20(1).
154. Yellow Book, supra note 130, § 6.C.5.
155. Id. § 6.D.1.
156. 17 C.F.R. § 229.101(c)(i) (1997). The threshold is 15% or more of consolidated revenues if they did not exceed $50,000,000 during any of those fiscal years. Id.
157. CADRE, supra note 113, at 10.
158. Yellow Book, supra note 130, § 6.D.1.
159. Cox, supra note 46, at 174 (describing the controversy over line of business information).
160. For a similar approach, see id. at 189-90 (suggesting the adoption of a safe harbor that would allow the company to maintain confidential line of business information).
161. See infra text accompanying note 209.
162. 17 C.F.R. § 229.101(c)(ii) (1997).
163. Id. § 229.101(c)(xi).
164. Form 7, supra note 128, § 20 (3).
165. See supra notes 145-46 and accompanying text.
166. Yellow Book, supra note 130, § 6.D.7.
167. See supra notes 148-49 and accompanying text.
168. 17 C.F.R. § 229.101(c)(iii) (1997).
169. Form 7, supra note 128, § 21(3)(c).
170. CADRE, supra note 113, at 9 (providing tabular data on the description of business disclosure requirements in the Major Markets).
171. 17 C.F.R. § 229.101(c)(iv) (1997).
172. CADRE, supra note 113, at 9.
173. Yellow Book, supra note 130, § 6.D.6.
174. Such information is disclosed (in accordance with law or custom) in all the Major Markets except Switzerland. CADRE, supra note 113, at 9.
175. 17 C.F.R. § 229.101(c)(v) (1997).
176. Seasonality is reflected, however, in the description of major operational indices over the most recent five years, which includes turnover and net operating profits. See Form 7, supra note 128, § 19(1). In addition, seasonality is required to be described in semiannual reports. CADRE, supra note 113, at 15.
177. Yellow Book, supra note 130, § 6.G.1.
178. CADRE, supra note 113, at 9. Working capital practice refers to carrying a significant amount of inventory and whether the issuer provides customers with extended payment terms or the right to return goods. 17 C.F.R. § 229.101(c)(vi) (1997).
179. 17 C.F.R. § 249.220(f) (1997).
180. 17 C.F.R. § 229.101(C)(vii) (1997). In addition, the identity of a customer accounting for 10% or more of the issuer's consolidated revenues must be disclosed if the loss of such a customer would have a material adverse effect on the issuer and its subsidiaries. Id.
181. Yellow Book, supra note 130, § 6.D.6.
182. Financial Services Act, 1986, ch. 60, § 146 (Eng.).
183. CADRE, supra note 113, at 13 (providing the EU interpretation).
184. See supra note 179 and accompanying text. This approach bridges the gap between the United Kingdom (and the EU) which does not require identification of important customers, and the Japanese requirement to disclose the identity of any customer which accounts for more than 10% of the issuer's revenues on an unconsolidated basis.
185. 17 C.F.R. § 229.101(c)(viii) (1997).
186. 17 C.F.R. § 249.220(f) (1997).
187. Form 7, supra note 128, § 21(4).
188. Yellow Book, supra note 130, § 6.G.1.
189. 17 C.F.R. § 229.101(c)(ix) (1997).
190. CADRE, supra note 113, at 9.
191. Yellow Book, supra note 130, § 6.D.6.
192. 17 C.F.R. § 229.601(b)(10) (1997). A material contract is defined as any contract not made in the ordinary course of business which is material to the issuer and is to be carried out, in whole or in part, at or after the filing of the registration material, or which was entered into not more than two years before such filing.
193. CADRE, supra note 113, at 16.
194. Yellow Book, supra note 130, § 6.C.20.
195. In the U.S., a similar exception applies to confidential information in material contracts. See 17 C.F.R. § 230.406 (1997).
196. 17 C.F.R. § 229.101(c)(x) (1997).
197. 17 C.F.R. § 249.220(f) (1997). See, in particular, Item 1(a)(5) of Form 20-F.
198. Form 7, supra note 128, § 21(1).
199. CADRE, supra note 113, at 9.
200. 17 C.F.R. § 229.101 (c)(xii) (1997).
201. CADRE, supra note 113, at 14.
202. 17 C.F.R. § 229.101(c)(xiii) (1997). It is customary, however, to include management's assessment of its relationship with employees and to state whether the employees are subject to collective bargaining agreements. See CADRE, supra note 113, at 11.
203. Form 7, supra note 128, § 19(11).
204. Yellow Book, supra note 130, § 6.D.10.
205. CADRE, supra note 113, at 17 (providing tabular information on industry segment disclosure); id. at 24 (presenting information on foreign and domestic operations and export sales).
206. 17 C.F.R. § 229.101(b) (1997). Alternatively, the information can be provided in the financial statements. Id.
207. 17 C.F.R. § 229.101(d). Alternatively, the information can be provided in the financial statements. Id.
208. Form 7, supra note 128, § 21(5).
209. Yellow Book, supra note 130, § 6.D.3.
210. See infra text accompanying notes 216-19.
211. CADRE, supra note 113, at 17.
212. 17 C.F.R. § 229.601(b)(21) (1997). Additional information is required, however, in the financial statements for non-consolidated subsidiaries. See 17 C.F.R. § 210.3-09.
213. Form 7, supra note 128, § 19(9).
214. These requirements include if the book value of the issuer's participating interest represents at least 10% of the issuer's capital and reserves or if the interest amounts to at least 10% of the consolidated net profit or loss. Yellow Book, supra note 130, § 6.E.11(b).
215. The United Kingdom further requires issuers to disclose the value at which the issuer shows the subsidiary in its accounts, any amount still to be paid on shares held, the amount of dividends received in the course of the preceding financial year with respect to shares held, and the amount of debt owed to and by the issuer with regard to the subsidiary. Id. § 6.E.11(a). Certain items may be omitted for subsidiaries which do not publish annual accounts, id. § 6.E.11(c), or which are consolidated into the issuer's financial statement, id. § 6.E.11(d).
216. Subsidiaries in which the issuer's holdings exceed 50% would be consolidated into the financial statements. The equity method of accounting would be used for investments in associate companies in which the investments provide the issuer with the ability to exercise significant influence over the operations and financial policies of the investee company. Under the equity method, the issuer's share of profits and losses of associate companies is included in the consolidated income statements. See IASC-U.S. Comparison Project, supra note 51, at 367-92 (analyzing the new international standards concerning accounting for investment in subsidiaries and in associate companies).
217. 17 C.F.R. § 229.102 (1997). In determining whether properties should be described, both quantitative and qualitative factors should be taken into account. Id.
218. Id.
219. Form 7, supra note 128, § 22.
220. Yellow Book, supra note 130, § 6.D.4. A principal establishment is defined as any establishment which accounts for more than 10% of net turnover or production. Id.
221. 17 C.F.R. § 229.303 (1997).
222. Id. § 229.303(a)(3)(i).
223. CADRE, supra note 113, at 41.
224. Yellow Book, supra note 130, § 6.D.5.
225. 17 C.F.R. § 229.303(a)(1) (1997).
226. Yellow Book, supra note 130, § 6.E.16.
227. Discussion of liquidity is provided, however, in annual or periodic reports. See CADRE, supra note 113, at 40.
228. 17 C.F.R. § 229.303(a)(2)(i) (1997).
229. 17 C.F.R. § 229.303(a)(2)(ii).
230. Form 7, supra note 128, § 22(1)(a).
231. Id. § 26(2).
232. Yellow Book, supra note 130, § 6.D.13.
233. 17 C.F.R. § 229.303(a)(3)(ii) (1997).
234. Section 27A of the Securities Act, 15 U.S.C. § 78u-5 (1997).
235. Yellow Book, supra note 130, § 6.G.1(b).
236. Id. § 6.G.2. In addition, the sponsoring member firm must have satisfied itself that the forecast was made after a due inquiry by the directors. Id.
237. For the important role of projections and the need to provide forward-looking statements with a safe harbor, see Safe Harbor for Forward-Looking Statements, Securities Act Release No. 7101, [1994-1995 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 85,436, at 85,779 (Oct. 13, 1994).
238. See Geiger, supra note 4, at 301-02.
239. Part of the information would also be useful for domestic investors who are not fully familiar with the corporate and tax systems in their own market.
240. The information would be provided only in the Global Forms because it is not practical to require every domestic company to supply this information with respect to foreign markets in which it does not offer securities.
241. This would enable issuers to copy the information into their offering documents with no significant costs. Issuers would be required, however, to make adaptations to the generic material if specific rules applied to them.
242. A similar summary is required in Japan. See Form 7, supra note 128, § 14(1). The Japanese requirements, however, apply only to foreign companies which offer securities in Japan.
243. This information is required in most Major Markets. See CADRE supra note 113, at 38.
244. Disclosure concerning taxes, to which security holders may be subject in accordance with the issuer's home country regulations, is required or customary in all Major Markets but Australia. See CADRE, supra note 113, at 39.
245. In the United States, depositary facilities are called ADRs (American Depositary Receipts). An ADR is a certificate issued by a U.S. depositary bank representing shares of a non-U.S. company deposited with the bank or its custodian. See Joseph Velli, American Depositary Receipts: An Overview, 17 Fordham Int'l L.J. S38, S39 (1994). For a description of the different forms and uses of ADRs, see id. at S43-50 (describing the different kinds of ADRs used by foreign issuers to enter U.S. capital markets).
246. Such information includes: (i) a conversion ratio; (ii) the voting procedures; (iii) collection and distribution of dividends; (iv) transmission of information; (v) sale or exercise of rights; (vi) deposit or sale of securities resulting from dividends, stock splits or reorganization; (vii) amendment, extension, and termination of the deposit; (viii) inspection rights; (ix) restrictions on the right to deposit or withdraw the underlying securities; and (x) limitations upon the liability of the depositary. See 17 C.F.R. § 229.202(f)(2) (1997).
247. Information regarding the method of distribution and the underwriting arrangement for purely domestic offerings would be provided in the Basic Form.
248. When securities are not offered in the issuer's home country, the effective date refers to the end of the review process of the Basic Form by the local authority. For a discussion of the review process of the Global Prospectus and mutual recognition, see supra part II.C.2.
249. It is doubtful that we would be able to identify a perfect rule even if we were to see one. While we may not agree, however, on the content of perfect rules, we should look for a process that is likely to produce such rules. See Lucian Arye Bebchuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law, 105 Harv. L. Rev. 1437, 1506-07 (1992).
250. See generally International Securities Regulation (Robert C. Rosen ed., 1997) (providing a description of securities regulation in most securities markets).
251. See, e.g., John C. Coffee, Jr., Market Failure and the Economic Case for a Mandatory Disclosure System, 70 Va. L. Rev. 717 (1984) (making the case for a mandatory disclosure system based upon the characteristics of information as a public good and the inefficiency of self-induced mechanisms); Frank H. Easterbrook & Daniel R. Fischel, Mandatory Disclosure and the Protection of Investors, 70 Va. L. Rev. 669, 697-98 (1984) (describing the third party effects whose control requires a mandatory disclosure system).
252. See, e.g., John C. Coffee, Jr., Market Failure and the Economic Case for a Mandatory Disclosure System, 70 Va. L. Rev. 717 (1984) (making the case for a mandatory disclosure system based upon the characteristics of information as a public good and the inefficiency of self-induced mechanisms); Frank H. Easterbrook & Daniel R. Fischel, Mandatory Disclosure and the Protection of Investors, 70 Va. L. Rev. 669, 697-98 (1984) (describing the third party effects whose control requires a mandatory disclosure system).
253. See White, supra note 55, at 20 (describing the difficulties government agencies may face in trying to obtain accurate information).
254. See Stephen J. Choi & Andrew T. Guzman, National Laws, International Money: Regulation in a Global Capital Market, 65 Fordham L. Rev. 1855, 1870-72 (1997) (describing the race-to-the-top model of regulatory competition); John C. Coffee, Jr., Competition Versus Consolidation: The Significance of Organizational Structure in Financial and Securities Regulation, 50 Bus. Law. 447, 453 (1995) (describing how the fear of market participants exiting theoretically produces regulation that discourages migration); Cox, supra note 46, at 159-60 (explaining regulatory competition in securities regulation).
255. See Stephen J. Choi & Andrew T. Guzman, National Laws, International Money: Regulation in a Global Capital Market, 65 Fordham L. Rev. 1855, 1870-72 (1997) (describing the race-to-the-top model of regulatory competition); John C. Coffee, Jr., Competition Versus Consolidation: The Significance of Organizational Structure in Financial and Securities Regulation, 50 Bus. Law. 447, 453 (1995) (describing how the fear of market participants exiting theoretically produces regulation that discourages migration); Cox, supra note 46, at 159-60 (explaining regulatory competition in securities regulation).
256. See Maura B. Perry, Note, A Challenge Postponed: Market 2000 Complacency in Response to Regulatory Competition for International Equity Markets, 34 Va. J. Int'l L. 701, 703-04 (1994) (explaining how the United States's costly and uncompetitive regulatory policy resulted in market participants' leaving for Europe).
257. See Simplification of Registration and Reporting Requirements for Foreign Companies: Safe Harbors for Public Announcements of Unregistered Offerings and Broker-Dealer Research Reports, Securities Act Release No. 7053, [1993-94 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 85,331, at 85,206 (Apr. 19, 1994). Both the reforms of the 1980s and the changes made in 1994 focus on the process of the offering, rather than on the content of the disclosure documents. They both, however, demonstrate the operation of the regulatory competition mechanism.
258. See Choi & Guzman, supra note 252, at 1890-91 (describing the problems with cooperative agreements among securities regulators).
259. See Geiger, supra note 4, at 275-76 (exploring the effects of the cost of information on investors' decisions).
260. See Bebchuk, supra note 248, at 1458-84 (analyzing the problem of managerial opportunism in connection with states' competition for corporate charters).
261. See Coffee, supra note 252, at 453-54 (describing the assumptions underlying regulatory competition theory); Geiger, supra note 4, at 276-80 (analyzing the lack of mobility among securities markets).
262. Through the Global Coordinator, regulators of all markets are to share information on an ongoing basis and monitor the operation of all markets.
263. See Bebchuk, supra note 248, at 1501-02 (comparing the motives of state and federal officials to offer concessions to managers); Geiger, supra note 4, at 290-97 (analyzing the race to the bottom and externalities problems in connection with regulatory competition in the securities markets).
264. See, e.g., White, supra note 55, at 19 (describing the weak incentives of government agencies).
265. See id. at 19-20.
266. One of the main reasons for the United States's market strength is the fairness and integrity of the market ensured by the operation of the SEC. See, e.g., Breeden, supra note 56, at S81-82 (describing the public confidence and market integrity preserved by the SEC as the most important factors in the U.S. competitive position); James R. Doty, The Role of the Securities and Exchange Commission in an Internationalized Marketplace, 60 Fordham L. Rev. S77, S78 (1992) (explaining that the SEC was created by Congress to ensure that U.S. markets are fair and efficient and that U.S. investors are treated fairly).
267. See supra text accompanying note 249.
268. See supra text accompanying note 119.
269. White, supra note 55, at 19 (describing how a government agent might be buffeted by diffuse goals).
270. Externalities occur when one state's actions affect another state's well-being, and the relevant costs are not reflected in the market price. Tyler Cowen, Public Goods and Externalities, in The Fortune Encyclopedia of Economics 74, 75 (David R. Henderson ed., 1993).
271. See Geiger, supra note 4, at 283-95 (discussing managerial opportunism and the race to the bottom in the context of securities disclosure).
272. White, supra note 55, at 41 (exploring the feasibility of harmonization).
273. For a discussion of these mechanisms, see part II.D.2-3.
274. See supra text accompanying notes 97-99.
275. Currently, the regulators of the Major Markets are participating in the development of the IOSCO Proposal. See supra note 5.
276. See generally George J. Stigler, The Theory of Economic Regulation, 2 Bell J. Econ. 3 (1971) (describing how regulators become representative of their clientele).
277. Coffee, supra note 252, at 473-74 (describing rent seeking behavior and agency "capture").
278. Each member of the general public suffers only a fraction of the total loss to the public, thus, finding it too expensive to oppose the rent seeking process. See White, supra note 55, at 21.
279. A possible example of a domestic agency that represents its clientele is the Japanese Ministry of Finance. The close relationship between the Ministry of Finance, which regulates the Japanese securities market, and its clientele might be the explanation for the scandals which have been unfolding in the Japanese financial industry in recent years. See James D. Cox, Regulatory Competition in Securities Markets: An Approach for Reconciling Japanese and United States Disclosure Philosophies, 16 Hastings Int'l & Comp. L. Rev. 149, 151-52 (1993) (describing the strong connection between the Ministry of Finance and financial institutions); Andrew Pollack, Japan Considers Opening the Veiled Corporate Ledger, N.Y. Times, Aug. 5, 1997, at D1 (describing recent scandals in Japan and the connection between these scandals and the structure of Japan's regulatory regime).
280. A possible example of a domestic agency that represents its clientele is the Japanese Ministry of Finance. The close relationship between the Ministry of Finance, which regulates the Japanese securities market, and its clientele might be the explanation for the scandals which have been unfolding in the Japanese financial industry in recent years. See James D. Cox, Regulatory Competition in Securities Markets: An Approach for Reconciling Japanese and United States Disclosure Philosophies, 16 Hastings Int'l & Comp. L. Rev. 149, 151-52 (1993) (describing the strong connection between the Ministry of Finance and financial institutions); Andrew Pollack, Japan Considers Opening the Veiled Corporate Ledger, N.Y. Times, Aug. 5, 1997, at D1 (describing recent scandals in Japan and the connection between these scandals and the structure of Japan's regulatory regime).
281. Coffee, supra note 252, at 474-75 (exploring the connection between agency "capture" and organizational size).
282. See Lewis D. Solomon & Louise Corso, The Impact of Technology on the Trading of Securities: The Emerging Global Market and the Implications for Regulation, 24 J. Marshall L. Rev. 299, 331-32 (1991) (describing the criticism of harmonization due to the long time it takes to negotiate and implement harmonized standards).
283. Gunnar Schuster, Extraterritoriality of Securities Laws: An Economic Analysis of Jurisdictional Conflicts, 26 Law & Pol'y Int'l Bus. 165, 194 (1994) (referring to the static structure of the harmonized system as a significant disadvantage).
284. See supra part II.D.2-3.
285. Mercado, supra note 55, at 348 (describing the effect of differing circumstances in various countries on the development of the IAS).
286. See, e.g., Michael A. Schneider, Foreign Listings and the Preeminence of U.S. Securities Exchanges: Should the SEC Recognize Foreign Accounting Standards?, 3 Minn. J. Global Trade 301, 335 (1994) (alleging that the capital market structure of many foreign nations minimizes the demand for disclosure).
287. For a detailed discussion of differences in corporate structure, see Mark J. Roe, Some Differences in Corporate Structure in Germany, Japan, and the United States, 102 Yale L.J. 1927 (1993).
288. For the classic story of the separation of ownership and control in the large public corporation, see Adolf Berle & Gardiner Means, The Modern Corporation and Private Property (1932).
289. See Roe, supra note 283, at 1939-41 (describing the structure of the Japanese market).
290. U.S. Competitiveness and Trade Policy in the Global Economy: Hearing Before the Committee on Banking, Housing, and Urban Affairs, 103rd Cong., 129, 130 (1994) (testimony of Arthur Levitt, Chairman U.S. Securities and Exchange Commission, Concerning International Markets and Individual Investors [hereinafter Levitt]. In contrast, in the United States, about 50% of stock is individually held. Id.
291. Roquette, supra note 8, at 599-613 (describing the German capital market and recent reforms).
292. Schneider, supra note 282, at 335-36 (discussing the capital market structure of Japan and Germany).
293. Roe, supra note 283, at 1941-46 (exploring structured interaction in Germany).
294. Pollack, supra note 276, at D1.
295. For discussion of the EU harmonization plan, see supra part I.A.
296. Solomon & Corso, supra note 278, at 329 (describing the nature of financial institutions used to market securities).
297. Id.
298. See Regulatory Reform in Transition: The Dismantling of the Glass-Steagall Act, 47 Admin. L. Rev. 545 (1995) (discussing the increased difficulty in separating banking and securities activities).
299. In November 1996, the Japanese Prime Minister announced a plan to deregulate Japan's capital market. This plan includes the lowering of the wall between the securities and commercial banking industries. See Sheryl WuDunn, Japan Announces New Plan to Deregulate Financial Markets, N.Y. Times, Nov. 12, 1996, at D9.
300. Cox, supra note 276, at 151-52 (describing securities regulation in Japan).
301. See Jay D. Hansen, London Calling?: A Comparison of London and U.S. Stock Exchange Listing Requirements for Foreign Equity Securities, 6 Duke J. Comp. & Int'l L. 197, 212-17 (1995) (describing the regulatory framework in the United Kingdom). The United Kingdom is currently reforming its securities and banking regulations. Following the reform, the securities and banking industries would be regulated by a single governmental agency.
302. For a detailed discussion of transition costs, see Louis Kaplow, An Economic Analysis of Legal Transitions, 99 Harv. L. Rev. 509 (1986).
303. See David Charny, Competition Among Jurisdictions in Formulating Corporate Law Rules: An American Perspective on the "Race to the Bottom" in the European Communities, 32 Harv. Int'l L.J. 423, 445-46 (1991) (providing an analysis of the transition costs involved in harmonization).
304. This argument follows the semi-strong form path dependence. See Mark J. Roe, Chaos and Evaluation in Law and Economics, 109 Harv. L. Rev. 641, 648-50 (1996) (explaining that in some situations, the cost of restructuring a system that has developed over a long time outweighs the efficiency that is achieved from this restructuring).
305. For a discussion of the advantages of harmonization for investors, see Geiger, supra note 4, at 307-10 (exploring the reduction in the cost of capital and the enhanced comparability that would result from harmonization).
306. A grandfathering exemption is commonly employed when a regulatory change is implemented. Such a provision exempts pre-reform investments from newly enacted laws. See Kaplow, supra note 298, at 584-87.
307. For the political aspects of harmonization and the potential resistance of regulatory agencies, see infra text accompanying notes 305-09.
308. Another source of costs is the actual cost of establishing and operating the institutional mechanisms of the Global Coordinator.
309. See Roe, supra note 300, at 651-52 (suggesting that even when an alternate solution exists and its efficiency exceeds the transition costs, incumbents might use their power to maintain the current status quo).
310. See Edward J. Kane, Tension Between Competition and Coordination in International Financial Regulation, in Governing Banking's Future: Market vs. Regulation 33, 34 (Catherine England ed., 1991).
311. For a discussion of the review process of the Global Prospectus, see supra part II.C.2.
312. See ISOCO Proposal, supra note 5; see also Levitt, supra note 286, at 132 (expressing the SEC's support for the developments of international disclosure standards within the framework of IOSCO). However, IOSCO does not pose a "threat" to the agencies' powers because all its decisions are made unanimously and are not binding upon the member states. See Guy, supra note 83, at 296-97.
313. See supra text accompanying note 67.