Download Amendments to HFCA Act: Regulations for Identified Issuers and Auditor Tagging and more Lecture notes Accounting in PDF only on Docsity!
Conformed to Federal Register version SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 200, 232, and 249 [Release No. 34-93701; IC-34431; File No. S7-03-21] RIN 3235-AM Holding Foreign Companies Accountable Act Disclosure AGENCY: Securities and Exchange Commission. ACTION: Final rule. SUMMARY: We are adopting amendments to finalize interim final rules that revised Forms 20- F, 40-F, 10-K, and N-CSR to implement the disclosure and submission requirements of the Holding Foreign Companies Accountable Act (“HFCA Act”). The final amendments apply to registrants that the Securities and Exchange Commission (“Commission”) identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the Public Company Accounting Oversight Board (“PCAOB”) is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. Consistent with the HFCA Act, the amendments require the submission of documentation to the Commission establishing that such a registrant is not owned or controlled by a governmental entity in that foreign jurisdiction and also require disclosure in a foreign issuer’s annual report regarding the audit arrangements of, and governmental influence on, such registrants. DATES: The amendments are effective on January 10, 2022, except for the addition of §232.405(c)(1)(iii)(C), which is effective from January 10, 2022, until July 1, 2023. FOR FURTHER INFORMATION CONTACT: Luna Bloom, Office Chief, at (202) 551-
3430, in the Office of Rulemaking, Division of Corporation Finance; Theodore Venuti, Assistant Director, at (202) 551-5658, in the Office of Market Supervision, Division of Trading and Markets; or Blair Burnett, Senior Counsel, at (202) 551-6792, in the Investment Company Regulation Office, Division of Investment Management; U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. SUPPLEMENTARY INFORMATION: We are adopting amendments to the following rules and forms. Commission Reference CFR Citation (17 CFR) Regulation S-T Rule 405 § 232. Securities Exchange Act of 1934 (Exchange Act)^1 Form 20-F § 249.220f Form 40-F § 249.240f Form 10-K § 249. Exchange Act and InvestmentCompany Act of 1940 (Investment Company Act)^2
Form N-CSR §§ 249.331 and 274.
Table of Contents I. Introduction ............................................................................................................................. 3 II. Discussion of Amendments ..................................................................................................... 6 A. Documentation Submission Requirements 1. Interim Final Amendments ................................................................ ........................................................................................ 6....... 6
- Comments .................................................................................................................. 7
- Final Amendments ..................................................................................................... 9 B. Disclosure Requirements ................................................................................................. 10
- Interim Final Amendments ...................................................................................... 10Comments ................................................................................................................ 12
- Final Amendments ................................................................................................... 14 C. Inline XBRL Tagging ...................................................................................................... 15 D. Timing Issues .................................................................................................................. 17 E. F. Determination of Commission-Identified IssuerProcess for Trading Prohibition ...................................................................................... 23 ............................................................. 18
- HFCA Act Trading Prohibitions .............................................................................. 23
- Process for Imposing a HFCA Act Trading Prohibition.......................................... 26 (^1) 15 U.S.C. 78a et seq. (^2) 15 U.S.C. 80a-1 et seq.
a registered public accounting firm^7 to issue an audit report^8 where that registered public accounting firm has a branch or office^9 that:
- Is located in a foreign jurisdiction; and
- The PCAOB has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.^10 Once identified, Section 104(i)(2)(B) of the Sarbanes-Oxley Act requires these covered issuers, which we refer to as “Commission-Identified Issuers” in this release, to submit documentation to the Commission establishing that they are not owned or controlled by a governmental entity in that foreign jurisdiction.^11 Additionally, Section 3 of the HFCA Act lists
(^7) We use the terms “registered public accounting firm” and “auditor” interchangeably to mean public accounting firms that, among other things, prepare accountant’s reports on U.S. public companies and are required toregister with the PCAOB. The term “accountant’s report” is defined in 17 CFR 210.1-02(a)(1) (Rule 1-02(a)(1) of Regulation S-X), with regard to financial statements, as a document in which an independent public orcertified public accountant indicates the scope of the audit (or examination) that the accountant has made and sets forth that accountant’s opinion regarding the financial statements taken as a whole, or an assertion to theeffect that an overall opinion cannot be expressed. (^8) The HFCA Act uses the term “audit report.” As noted above, see supra note 7 , for the purposes of this release and the final amendments, the term “audit report” has the same meaning as “accountants’ report” in Rule 1-02(a)(1) of Regulation S-X. (^9) Where a branch or office of an international firm network is a separate legal entity from the U.S.-based or international firm network, and that branch or office signs the audit report in its own name, the Commission willlook to the PCAOB determination for that branch or office and not apply that determination to the U.S.-based or other branches or offices of that firm network that are not based in the PCAOB-identified foreign jurisdiction. (^10) On September 22, 2021, the PCAOB adopted PCAOB Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable ActPublic Company Accounting Oversight Board; Order Granting Approval of Proposed Rule Governing Board , which was approved by the Commission on November 4, 2021. See Determinations Under the Holding Foreign Companies Accountable Act [86 FR 62581 (Nov. 10, 2021]. The PCAOB Rule 6100 establishes a framework for the PCAOB to make its, Release No. 34-93527 (Nov. 4, 2021) determinations required by the HFCA Act. Specifically, PCAOB Rule 6100 establishes the manner of thePCAOB’s determinations; the factors the PCAOB will evaluate and the documents and information it will consider when assessing whether a determination is warranted; the form, public availability, effective date, andduration of such determinations; and the process by which the PCAOB will reaffirm, modify, or vacate any such determinations. In this release, we refer to a registered public accounting firm that the PCAOB hasdetermined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction as a “PCAOB-Identified Firm.” (^11) In addition to this submission requirement, pursuant to Section 104(i)(3) of the Sarbanes-Oxley Act, as added by Section 2 of the HFCA Act, if an issuer is a Commission-Identified Issuer for three consecutive years, theCommission must prohibit the securities of the issuer from being traded on a national securities exchange or
additional disclosure requirements for Commission-Identified Issuers that are “foreign issuers”^12 (“Commission-Identified Foreign Issuers”). We received a number of comment letters in response to the interim final amendments. While several commenters generally supported them,^13 some provided specific suggestions on how to improve them or otherwise implement the HFCA Act,^14 and others opposed^15 the interim final amendments. Generally, commenters supporting the interim final amendments stated that the amendments effectively provided for timely implementation of the HFCA Act^16 and also informed investors about the level of ownership and control the Chinese Government has in listed companies.^17 Additionally, commenters supporting the interim final amendments asserted that they agreed with the objective of the HFCA Act and were concerned about the lack of transparency into Chinese companies.^18
through any other method that is within the jurisdiction of the Commission to regulate, including through “over-the-counter” trading. 15 U.S.C. 7214(i)(3). (^12) See 17 CFR 240.3b-4 (“Exchange Act Rule 3b-4”). Under Exchange Act Rule 3b-4, the term “foreign issuer” means any issuer that is a foreign government, a national of any foreign country, or a corporation or otherorganization incorporated or organized under the laws of any foreign country. (^13) See letters from American Securities Association (May 5, 2021) (“ASA”), Council of Institutional Investors (May 5, 2021) (“CII”), U.S. Chamber of Commerce (May 21, 2021) (“Chamber”), United States Senator DanSullivan et al. (Aug. 9, 2021) (“Sen. Sullivan et al. ”), and United States Senator John Kennedy (Apr. 28, 2021) (“Sen. Kennedy”). (^14) See letters from ICI Global (May 5, 2021) (“ICI”), Jessica Kelly (Apr. 30, 2021) (“Kelly”), Professor Curtis J. Milhaupt and Professor Lauren Yu-Hsin Lin (Apr. 5, 2021) (“Profs. Milhaupt and Lin”), New York StockExchange LLC (May 12, 2021) (“NYSE”), and Professor Emmanuel T. De George et al. (May 4, 2021) (“U.S. Acctg. Academics”). (^15) See letters from Blank Rome LLP (May 5, 2021) (“Blank Rome”); China Petroleum & Chemical Corporation (Apr. 30, 2021) (“China Petroleum”); China Southern Airlines Company Limited (Apr. 30, 2021) (“ChinaSouthern”); Professor Jie et al. (May 3, 2021) (“Chinese Legal Academics”); Shanshan Xu (May 2, 2021) (“Xu”); and Yum China Holdings, Inc. (May 4, 2021) (“Yum”). (^16) See, e.g., letter from ICI. (^17) See, e.g., letter from ASA. (^18) See, e.g., letter from Chamber.
F, and Form N-CSR to implement this provision. The submission requirement applies to all Commission-Identified Issuers. The interim final amendments required this documentation to be submitted electronically to the Commission on a supplemental basis^25 through the Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system on or before the due date of the relevant annual report form. Although the interim final amendments prescribed the timing and means by which such submissions were made, neither they nor the HFCA Act specified the particular types of documentation that could or should be submitted for this purpose. Moreover, in the Interim Final Release, the Commission recognized that available documentation could vary depending upon the organizational structure and other factors specific to the registrant. Thus, registrants had flexibility under the interim final amendments to determine how best to satisfy this requirement.
2. Comments
One commenter recommended that registrants make the submission of documentation establishing that the issuer is not owned or controlled by a governmental entity in the foreign jurisdiction of the PCAOB-Identified Firm in the form of a certification, but did not support requiring the submission to be filed in a Form 8-K because it should not be classified as a “material event” and did not support requiring disclosure that a registrant is a Commission Identified issuer under Form 8-K.^26 This commenter suggested that making the submission publicly available or filed as an exhibit would exceed the actions authorized by the HFCA Act
(^25) For purposes of the interim final amendments, use of the term “supplemental” did not have the meaning of “supplemental information” in 17 CFR 240.12b-4. This is true for the final amendments we are adopting in thisrelease as well. (^26) See letter from Yum.
and indicated that registrants may wish to seek confidential treatment for some or all of the submission. The commenter also suggested that we establish a universal due date for the submission requirement that is later than the due date for the annual report to provide registrants additional time to prepare the submission and reduce the costs of compliance, and that we should not make the determinations of Commission-Identified Issuers more often than annually. Additionally, the commenter recommended that a registrant retain flexibility over the type of documentation a Commission-Identified Issuer must submit to establish that it is not owned or controlled by a governmental entity in the foreign jurisdiction based on its facts and circumstances, but indicated that publication of non-exclusive methods to satisfy the requirement would be valuable. This commenter suggested potential non-exclusive methods to show there is no ownership or control, such as there has been no Schedule 13D or 13G filing by a government related entity in the foreign jurisdiction, there are no material contracts with a foreign governmental party, or there is no foreign government representative on the board. Another commenter recommended additional guidance on the meaning of “owned or controlled.”^27 The commenter suggested that the amendments use the term “significant influence” under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and incorporate specific examples including: (1) where a government entity or affiliate has 20 percent or greater ownership or voting interest; (2) existence and effect of potential voting rights that are currently exercisable or convertible; (3) when an entity is represented on the board of directors or equivalent governing body of the investee entity; and (4) an entity’s participation in policy-making processes, including participation in decisions about dividends or other distributions.
(^27) See letter from U.S. Acctg. Academics.
Act reference a person’s or governmental entity’s ability to “control” the registrant as that term is used in the Exchange Act and the Exchange Act rules. One commenter suggested that the amendments use the term “significant influence” under U.S. GAAP and incorporate a specified list of examples. We note, however, that the HFCA Act refers to the Exchange Act and the Commission’s Exchange Act rules. Therefore, we believe the terms “owned or controlled,” “owned,” and “controlling financial interest” used in the HFCA Act are reasonably read to have the same meaning as the term “control” as used in the Exchange Act and the Exchange Act rules. Moreover, registrants should generally understand the concept of “control” and so incorporating the same meaning will result in consistent application of the concept across different regulatory contexts. B. Disclosure Requirements
1. Interim Final Amendments Section 3 of the HFCA Act requires a Commission-Identified Foreign Issuer to provide the following additional disclosures in its annual report for the year that the Commission so identifies the issuer: 30
- That, during the period covered by the form, the PCAOB-Identified Firm that has prepared an audit report for the issuer;^31
(^30) The HFCA Act requires these disclosures in the issuer’s Form 10-K, Form 20-F, or a form that is the equivalent of, or substantially similar to, these forms. The disclosures required by Section 3 of the HFCA Act are alsorequired in transition reports filed on Forms 10-K and in transition reports on Form 20-F that include audited financial statements. The disclosures should address the transition period as if it were a fiscal year. (^31) The registered public accounting firm referenced in the statute means a PCAOB-Identified Firm. See supra noteslanguage to clarify this and other points. Specifically, the interim final amendments required a Commission- 7 through 10. The interim final amendments included slightly different terms than those in the statutory Identified Foreign Issuer to disclose that, for the immediately preceding annual financial statement period, aregistered public accounting firm that the PCAOB was unable to inspect or investigate completely, because of a position taken by an authority in the foreign jurisdiction, issued an audit report for the registrant. For the samereasons, the final amendments include the same terms used in the interim final amendments for clarification as well.
- The percentage of the shares of the issuer owned by governmental entities in the foreign jurisdiction in which the issuer is incorporated or otherwise organized;
- Whether governmental entities in the applicable foreign jurisdiction with respect to that registered public accounting firm have a controlling financial interest with respect to the issuer;
- The name of each official of the Chinese Communist Party (“CCP”) who is a member of the board of directors of the issuer or the operating entity with respect to the issuer; and
- Whether the articles of incorporation of the issuer (or equivalent organizing document) contains any charter of the CCP, including the text of any such charter. Although Section 3 of the HFCA Act does not mandate specific rule or form changes, the Commission stated its belief in the Interim Final Release that amending Commission forms to include the new disclosure requirements will help registrants comply with the HFCA Act. The Commission therefore amended Form 10-K, Form 20-F, Form 40-F,^32 and Form N-CSR^33 to reflect the disclosure requirements in Section 3 of the HFCA Act. The interim final amendments required a registrant to provide the disclosure for each year in which the registrant is a Commission-Identified Foreign Issuer. Because the period covered
(^32) As we noted in the Interim Final Release, in reviewing the Commission’s forms, we determined that Form 40-F is an equivalent or substantially similar form filed by foreign issuers. The Form 40-F is a form that may be usedby Canadian issuers that seek to offer their securities in the United States and is used by those issuers for annual reports filed under Section 13(a) or Section 15(d) of the Exchange Act. As such, even though the form is notexpressly named in the HFCA Act, its use by issuers for annual reports filed under Section 13(a) and Section 15(d) establishes the form as equivalent or substantially similar to the Form 10-K and Form 20-F. (^33) Form N-CSR is an annual reporting form used by registered investment companies that are affected by the HFCA Act to file their audited financial statements with the Commission. Although Form N-CSR is notspecifically identified in the HFCA Act, as we indicated in the Interim Final Release, its use by these registered investment companies for annual reports filed under Section 13(a) and Section 15(d) establishes the form asequivalent or substantially similar to the Form 10-K and Form 20-F.
incorporation. The commenter recommended requiring disclosure of each board member’s current and past positions and ranks within the Chinese Government or CCP and whether the board member serves on the registrant’s internal Communist Party Committee (suggesting such disclosure would provide material information about an individual’s links to the Chinese party-state and, by extension, the degree of influence the party-state exerts over the company). Additionally, the commenter recommended disclosure of all provisions in a registrant’s articles of incorporation that reference the CCP or the company’s internal Communist Party Committee. This commenter stated that since many companies with Chinese operations are listed in the United States using variable interest entity (“VIE”) structures incorporated in jurisdictions outside of China, the disclosure requirements could be read as not requiring disclosure of Chinese Government ownership of shares of the registrant. The commenter recommended that the amendments clarify that “Commission-Identified Foreign Issuers are required to disclose the percentage of shares of the registrant owned by governmental entities in the foreign jurisdiction in which the registrant is incorporated or otherwise organized, or in which the registrant’s operating entity is incorporated.” Another commenter recommended that the Commission consider whether risks are heightened for registrants using a VIE structure, given that the structure could block meaningful disclosure of financial and political information.^37 A different commenter also noted concerns with VIE and dual-class structures, which are complex and involve risks that the commenter believes are not fully understood by many market participants.^38 This commenter recommended
(^37) See letter from Kelly. (^38) See letter from CII.
additional disclosure guidance for VIE and dual-class stock structures for investors to more fully understand the ownership or control of those registrants subject to the HFCA Act. Moreover, one commenter suggested that we consider distinguishing registrants that list exclusively on a U.S. exchange from those that have a secondary listing overseas, noting the Commission’s assessment in the Interim Final Release that 79 percent of registrants covered by the HFCA Act disclose listing only on a U.S. national exchange.^39 Another commenter suggested vigilance relating to firms that switch between U.S. and foreign jurisdictions to reset the clock or switch to auditors operating only nominally in the United States.^40
3. Final Amendments We are finalizing the disclosure requirements for Commission-Identified Foreign Issuers with a minor modification to the interim final amendments. As with the interim final amendments, we are adopting amendments to Form 10-K to revise Part II, Item 9C, Form 20-F to revise Part II, Item 16I, Form 40-F to revise paragraph B.18, and Form N-CSR to revise paragraph (j) of Item 4. The amended language in these forms is the same as the language in the interim final amendments, with the exception of the modification pertaining to VIE structures described below, and requires a Commission-Identified Foreign Issuer to provide the disclosures discussed above that are required by the HFCA Act.^41 We do not believe it is necessary to explain further what is meant by “official of the CCP” or require additional disclosures relating to this matter at this time. We believe the term is clear from the HFCA Act and our amendments. Moreover, we are not adopting additional disclosure requirements suggested by some commenters, as they would exceed the HFCA Act’s
(^39) See letter from Kelly (citing Interim Final Release, supra note 3 , at 17538, n. 54). (^40) See letter from U.S. Acctg. Academics. (^41) See supra Section II.B.1.
tagging requirements pertaining to the auditor name and jurisdiction on the audit report signed by the registered public accounting firm in the registrant’s Form 10-K, Form 20-F, and Form 40-F. We suggested that such tagging would provide machine-readable data directly from the registrant identifying the audit firm retained by it, and may therefore facilitate the Commission’s determination of the registrants it should designate as Commission-Identified Issuers. Two commenters recommended an eXtensible Business Reporting Language (“XBRL”) structured tagging requirement.^43 One of these commenters recommended tagging the auditor name, branch office, and PCAOB jurisdiction as listed on the Form AP, and the other commenter suggested tagging the auditor’s name and jurisdiction as set forth on the audit report.^44 Consistent with these commenters’ suggestions, the final amendments include a new tagging requirement to facilitate the Commission’s accurate and efficient identification of Commission-Identified Issuers. To implement this requirement, in December 2021, the Document Entity and Information (“DEI”) taxonomy will be updated to include three additional data elements, applicable to annual report filings on Forms 10-K, 20-F, and 40-F that are submitted with XBRL presentations.^45 Those three data elements will identify the auditor (or auditors) who have provided opinions related to the financial statements presented in the registrant’s annual report, the location where the auditor’s report has been issued, and the PCAOB ID Number(s) of the audit firm(s) or branch(es) providing the opinion(s).
(^43) See letters from U.S. Acctg. Academics and CII. (^44) See letter from U.S. Acctg. Academics. (^45) We expect that the revised DEI Taxonomy will be published as “dei-2021q4.” A draft of the taxonomies was published for comment on September 1, 2021 at Draft 2022 SEC Taxonomies, available at https://www.sec.gov/structureddata/announcement/osd- https://xbrl.sec.gov/dei/2021q4/. See DRAFT 20201Q4 and announcement-081621-draft-cef-and-vip-taxonomies-update Taxonomies 2021Q4 DRAFT , U.S. SEC. E XCH. & COMM ’N (Sept. 1, 2021), available at. See Also Release Notes for CEF and DEI https://xbrl.sec.gov/doc/releasenotes-2021q4-draft.pdftaxonomy for Form N-CSR because the Commission currently collects on Form N-CEN (referenced in 17 CFR. We are not making similar updates to the DEI 249.330) information regarding a fund’s auditor in a structured data format.
When the updated DEI taxonomy is published, deployed to EDGAR, and announced as part of the newly-adopted EDGAR Filer Manual for the relevant release in December 2021, all registrants will be required to use the updated taxonomy, or a subsequently adopted version of the taxonomy, for any annual report filed for a period ended after December 15, 2021. We are adding a new paragraph to Rule 405 of Regulation S-T to clarify that registrants must use the new data elements. The paragraph will remain part of Regulation S-T until the 2021 DEI taxonomy has been removed from EDGAR in 2023. Because we are not adopting a change to the underlying forms, for registrants that are filing their financial statements using Inline XBRL, the final amendments leave placement of the underlying tags within the annual report up to the registrant.^46 D. Timing Issues The HFCA Act was enacted on December 18, 2020 and provides for identification of the issuers required to file reports under Section 13 or 15(d) of the Exchange Act during a year that begins “after the date of enactment” of the HFCA Act. Given this statutory language, and in response to some commenters,^47 we reiterate that a registrant will not be subject to a non- inspection year determination for any fiscal year ending on or prior to December 18, 2020. Accordingly, the Commission will identify registrants pursuant to the HFCA Act based on the PCAOB’s determination and on registrants’ annual reports for fiscal years beginning after December 18, 2020. The earliest that the Commission could identify a Commission-Identified Issuer would be after registrants file their annual reports for 2021 and identify the accounting
(^46) The new DEI tagged data elements, particularly the PCAOB ID Number, are not new disclosure requirement themselves (necessary for EDGAR and the staff to process the forms, akin to an EDGAR header data element. The data e.g., not changing the current form and content of the independent auditor’s report), but are elements will to assist the Commission and its staff in performing the required identification activity required bythe Act. (^47) See letters from ASA, Chamber, and NYSE.
registrant’s status if the list is made public and whether it should issue guidance or prescribe rules relating to disclosure or procedures for identification of errors relating to a registrant’s status. A few commenters suggested that the Commission should make the Commission- Identified Issuer determination based on the registrant’s fiscal year end.^48 One commenter stated that the Commission should make determinations and provide notice to registrants as early as possible after a registrant’s filing of its annual report.^49 Some commenters recommended publishing the list of Commission-Identified Issuers on the Commission’s website,^50 while one commenter recommended providing the information on EDGAR for efficient and rapid identification.^51 One commenter suggested that providing a list or identifying Commission-Identified Issuers on EDGAR is unnecessary and doing so would go beyond the statutory mandate.^52 Some commenters indicated that the Commission should notify directly any registrants that it has determined to be Commission-Identified Issuers prior to publishing the list, in light of the potential market impact on these issuers and to ensure accuracy of such a list.^53 Yet another commenter recommended that the Commission provide guidance rather than prescribe rules relating to disclosure or procedures to correct errors relating to the Commission’s inclusion of a registrant on its Commission-Identified Issuer list to provide flexibility to the Commission and
(^48) See letters from Chamber (recommending 30 or 45 days after the filing deadline for the annual report), U.S. Acctg. Academics, and Yum. (^49) See letter from Yum. (^50) See letters from ASA, Chamber, and U.S. Acctg. Academics. (^51) See letter from CII. (^52) See letter from Yum. (^53) See letters from Chamber and Yum.
registrants.^54 One commenter noted potential discrepancies between the three primary sources of public data that could be used to determine Commission-Identified Issuers: (1) the PCAOB’s published list of audit reports in jurisdictions where authorities deny access, (2) the PCAOB’s Form AP database, and (3) registrants’ annual reports filed on EDGAR.^55 According to the commenter, these potential discrepancies raise a concern regarding the information on which the Commission would base its determination. The commenter also argued that, in situations with multiple audit reports in an annual report filing, the “retained” auditor should be “the auditor who signs off on the current (or more recent) fiscal-year financial statements.” Based on our further consideration and the input of commenters, we have determined to institute the following procedures for preparing and publishing the Commission-Identified Issuer list. We agree with the commenter who suggested that registrants should be identified as early as possible after the filing of an annual report and on a rolling basis.^56 Accordingly, promptly after the filing of an annual report, the Commission will evaluate, using Inline XBRL tagging or other structured data, whether the annual report contains an audit report signed by a PCAOB-Identified Firm.^57 We continue to believe that a registered public accounting firm is “retained” by a registrant, as that term is used in Section 104(i) of the Sarbanes-Oxley Act, when the registered
(^54) See letter from Yum. (^55) See letter from U.S. Acctg. Academics. (^56) See supra note 49. (^57) In response to the commenter that raised concerns regarding the potential discrepancies between primary sources of data from which the Commission may generate its list, we note that we intend to base adetermination on whether a registrant is a Commission Identified Issuer based on the audit report included in their annual report filing. We do not believe that the determination should be made based on Form AP filingsbecause these are not filings made by the registrant.
