The Future Role and Form of Investor Information

The Future Role and Form of Investor Information in Disclosure Documents A project of the Capital Markets Forum of the International Bar Association August 2010 London: 385637. 2

Project Overview 1. 2. 3. 4. London: 385637. 2 Introduction of the project Project organisation Proposed project timetable High-level overview of working groups

1: Introduction of the Project • The project on the future role and form of investor information in disclosure documents (the "Project") is organised and managed by the Capital Markets Forum ("CMF") of the IBA; • The Project will take into account the evolving disclosure standards and policies promulgated by IOSCO and other standard setting bodies, and will analyse trends towards global harmonisation of disclosure frameworks, including the focus on convergence of accounting rules; • Two working groups have been formed: one on Financial Reporting and one on Prospectuses London: 385637. 2

2: Project Organisation CMF Steering Committee René Bösch Rachel Eng Thomas Wallinder George White Petra Zijp Working Group I Financial Reporting CMF Coordinators: George White, Petra Zijp Working Group II Prospectuses CMF Coordinators: René Bösch, Rachel Eng, Thomas Wallinder Form and Dissemination London: 385637. 2 Contents and Presentation

2: Current Working Group Members (As of 25 August 2010) Group I – Financial Reporting Group II – Prospectuses (continued) James D. COX – Professor, Duke University School of Law, Durham, North Carolina; author of Financial Information, Accounting and the Law, Securities Regulation: Cases and Materials, etc. Laura HOLLEMAN – Managing Director, Goldman Sachs International, London Geoffrey MITCHELL – Director of Mizuho International, London; former Chief Accountant, Barclays PLC THAM Sai Choy – Head of Audit, Asia-Pacific and Singapore, KPMG, Singapore George WHITE* – Partner, Sullivan & Cromwell, LLP, London; Co. Chair Capital Markets Forum John WHITE – Partner, Cravath, Swaine & Moore LLP, New York; former director, SEC Division of Corporation Finance Petra ZIJP* – Partner, Nauta Dutilh N. V. , Amsterdam René BÖSCH* – Partner, Homburger AG, Zurich; Co-Chair, Capital Markets Forum Lachlan BURN – Partner, Linklaters LLP, London Ezra DAVIDS – Head of Corporate, Bowman, Gilfillan, Johannesburg Rachel ENG* – Partner, Wong Partnership LLP, Singapore Klaus LÖBER – Head of Oversight Division, Directorate General Payments and Market Infrastructure, European Central Bank, Frankfurt Andreas MEYER – Deutsche Bank, Frankfurt Alfred PAGE – Partner, Borden Ladner Gervais LLP, Toronto; representative of the IBA Securities Law Committee Rogier RAAS, – Partner, Stibbe, Amsterdam Richard TENG, – Singapore Exchange Securities Trading Limited, Singapore; previously Monetary Authority of Singapore Michel TISON – Professor, Universiteit Gent, Belgium Group II – Prospectuses Peter BÄÄRNHIELM – Head of Investment Banking, Carnegie Investment Bank AB, Stockholm Bart BIERENS – Rabobank International, The Netherlands London: 385637. 2 Thomas WALLINDER* – Partner, Mannheimer Swartling, Stockholm Thomas WERLEN – General Counsel, Novartis International AG, Basel

3: Proposed Project Timetable 2010 June - September Organise working groups, prepare broad outlines of position papers Week of 4 -8 October Working session during IBA annual conference in Vancouver October - December Development of draft position papers 2011 January Further work on draft position papers February - March Draft position papers circulated for comment Week of 18 -22 April Position papers presented and discussed at working session to be held in conjunction with IOSCO annual conference in Cape Town May-June Position papers finalised and published London: 385637. 2

4: High-level overview of working groups Working Group I - Financial Reporting • Planned convergence US GAAP–IFRS – – – • Current status, position of IASB, SEC, etc. What are the effects if coexistence continues? What disclosure shall be provided for explaining the differences problem: no comfort provided by Big Four on description of differences • – – – London: 385637. 2 Important for investors? Would investors be better served by a guide on how to read financial statements? (See below) Guide: how to read financial statements Layman's guide for investors on how to read financial statements Guideline to be developed • • Standalone, unconsolidated financial statements: still needed/meaningful? Non-GAAP financial disclosure – – – Description of accounting policies – – Stand-alone vs. consolidated financial statements Permissibility Restrictions Standards Publication of forecasts? Reliability of financial statements – – – How reliable are financial statements? Role of auditors Do users of financial statements understand limits of reliability?

4: High-level overview of working groups Working Group IIA - Form and Dissemination of Prospectuses • What is the "prospectus"? – – • – – – Permissibility? Availability of documents via websites etc. ? Restrictions? Short form prospectuses – – – London: 385637. 2 Permissibility? Required? Meaningful? Scope of prospectus liability One size doesn't fit it all? Use of electronic means of delivery – One document, multiple documents? Base prospectus concept versus standalone prospectus versus three-part prospectus? Printed vs. electronic form: is one of those the controlling document? Incorporation by reference (see below) Incorporation by reference: – – – • • Date of prospectus: regular updating requirements vs. validity as of date of publication? Permissibility? Additional physical distribution? Push vs. Call? Offering restrictions? Organisation of webpage • • Access restrictions? Posting duration requirements? Updating requirements Timing of delivery of prospectus – – Start of subscription period? Before closing?

4: High-level overview of working groups Working Group IIB - Contents and Presentation of Prospectuses • To whom shall prospectuses effectively be addressed? – – • • Change in paradigm: addressed to financial intermediary instead of investor? Quality versus quantity? – – • Retail investors Financial intermediaries Sophisticated institutional investors Others Size limitations? Use and length of risk factors? Summary – – – London: 385637. 1 Required? Contents and size limitation? Prescribed format? • Plain English concept – – – • How easy to read? Usage of defined terms or technical terms? Different approaches to concept? Prescribed disclosure standards – – IOSCO standards as precedent Variations from IOSCO Standard • • Implementation in national law: level and degree of implementation Description of variations Reasons for variations Liability issues – – Single standard vs. variable standard Role of comfort letters: procedures, coverage, reliance, etc.