It’s closing U.S. bell for some German companies

[SoCalDem]

http://www.iht.com/articles/2004/11/19/business/delist.html

It’s closing U.S. bell for some German companies
By Mark Landler The New York Times Saturday, November 20, 2004

FRANKFURT

Add another entry to the list of how Americans and Europeans are parting ways. Several German companies, who rushed to list their shares in the United States during the bull market of the late 1990s, are now seriously thinking about abandoning the market.The Germans are disenchanted by the United States as a source of capital, and offended by what they view as oppressive new regulations adopted in the wake of Enron and other corporate scandals.
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Siemens refused to confirm or deny the report. But the mere suggestion that a household name, with 70,000 employees in the United States, would take such a step has increased the debate.The trouble, the Germans have discovered, is that getting out of the United States is as daunting as getting in. The U.S. Securities and Exchange Commission imposes strict rules before it will "deregister" any publicly listed company, thus freeing it from disclosure requirements. German executives contend the United States should ease the rules for foreign companies because European regulators make it comparatively easy for Americans to withdraw from their markets.
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French and British companies are also unhappy about the new rules, and a group of European trade and industry groups has suggested, among other things, that U.S. regulators allow a company to be deregistered if less than 5 percent of its overall trading volume is in the United States. Of the 18 German companies listed on the New York Stock Exchange or Nasdaq, only three generate more than 5 percent of their total volume in New York. And only one, SAP, the business software giant, generates a substantial percentage of its volume - 22.5 percent - in the United States.
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"They got into the market with the euphoria of the late 1990s, thinking, 'We want to go to America, we want the liquidity, we want the prestige,"' said Sina Hekmat, a partner at the Frankfurt office of Jones Day, who advises German companies on U.S. securities laws. "The benefit, both in terms of tangible and intangible benefits, didn't materialize. And this was compounded by the year-in, year-out cost and effort of staying in the U.S. market."
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[Benhurst]

1. A simple case of rats deserting a sinking ship. n/t

[Tandalayo_Scheisskopf]

2. Yup.

The US dollar is losing its reason for attracting companies.

[Eurobabe]

3. WTF are these a$$holes doing to this country??

FIRE THE MBA CEO dipshit already, and take the "staff" with him.

Calling Elliot!

[DBoon]

8. THAT CEO can only be impeached - not fired

I'm sure his illiterate xenophobic based is pleased that all them furriners are getting out of here.

[liberal N proud]

4. The dominos are starting to fall

These are the companies that help prop up the US economy when it is down.
When they are gone, look out. Times will get real bad.

[phantom power]

5. Oppressive new regulations? In the wake of Enron?

What are they talking about??

[SoCalDem]

6. Perhaps Bushie promised them the "land of milk and honey"

and free rein to do whatever they liked with no rules..

We need MORE rules..not less

[aneerkoinos]

7. rules

It's not the quantity, it's the quality.

[Merlin]

9. Here's what they're talking about.

We now make execs sign off on financial statements. Thus they are personally liable.

We do it because a 1995 bill permitting accounting firms to also act as consultants created incentives for such firms to be less than objective in their audits of firms for which they were also consulting.

If the Europeans have tighter rules on accounting firms, this may not be a problem for them. But they evidenly also are more lax on disclosures like exec salaries.

More from the article:

The tipping point, he said, was new regulations mandated by the Sarbanes-Oxley Act of 2002, which generated heavy legal costs and made executives more accountable for the accuracy of financial statements. German executives took umbrage at the requirement that the chief executive and chief financial officer sign off on financial reports. They argue that this is at odds with the structure of German corporations, which have management committees that, publicly at least, function as a collective.

...
The chemical giant BASF, which has traded in New York since 2000, is also unhappy about the rules. Its chairman, Jürgen Hambrecht, described them in a news conference this week as "bureaucratic overkill," although he added that BASF would retain its listing.

In reality, German governance and securities laws are gradually coming more in line with those in the United States. Volkswagen, one of the country's most conservative companies, said this past week that it would disclose the salaries of its top executives.

Lion Bioscience, a biotechnology company based in Heidelberg, said it spends €1.5 million, or $1.95 million, a year on legal and other fees related to the registration of its U.S. securities. Its total annual expenses are roughly $20 million, according to a spokesman, Günter Dielmann. Last month, Lion's entire top management walked out because the company declined to extend their liability insurance. Lion, which has had severe financial problems, announced this past week that it would voluntarily delist its American depositary shares from Nasdaq on Dec. 22.

[leesa]

10. That doesn't sound very oppressive at all.

But I guess if you are a white collar criminal, it cuts into your profits.

[Merlin]

11. In their defense...

an analogy to how they feel might be parents being required to sign off on their child's term paper to guarantee the child didn't crib it from the internet, under pain of fine and imprisonment for the parents.

In the European situation it's worse since corporate governance is done by committee. So it would be like one set of parents being required to sign off on a team of students who are working on a single project.

This problem would not have developed if the U. S. accounting industry had not surrendered its integrity.

In typical asinine fashion, rather than dealing directly with the problem, we are trying to deal with its secondary effects instead.

[amandabeech]

12. Sarbanes-Oxley also forces companies to institute new

and perhaps duplicative and surely costly financial reporting controls. For smaller companies, this may be a real burden, and may mean that smaller companies will remain private much longer. Such is not the case with Siemens, however.

There are also rules, some in new exchange regulations, which place serious responsibilities on board of directors' audit committees which must be composed of independent directors. There are reports that few top-level people are interested in serving on audit committees, which may end up being a real problem.

Europeans may find this all completely ridiculous.

[gottaB]

13. When I think of transparency in Europe

I think of Parmalat.

[aneerkoinos]

14. Europe of many cultures

...and in the southern ones, "law-abiding" is not the first of virtues. ;)

Myself, having lived both in law-abiding Finland and less abiding Greece, see that there is also lot of good in the anarchistic "wear them out" mentality to Governement legislation - e.g. Greek governement trying to make bars close earlier or ban smoking is parts of restaurants! :D. If the law is not liked, people pretend to follow it for couple weeks, then it is forgotten by popular consensus, which rather abides to unwritten social code. Less law-abiding means many ways more relaxed and tolerant society, live and let live sort of way. And Italy? What to say, it is a nation of thieves... once you learn that and accept it, no problems.