The US Securities and Exchange Commission (SEC) is facing renewed calls to loosen its rules after failing to appease foreign companies that say it is too difficult to escape financial reporting obligations to US shareholders.

A coalition of European business associations is preparing to tell the US market regulator that it has not gone far enough with proposals to make it easier to "deregister" from the SEC and thus avoid US reporting requirements. Deregistration rules came to prominence after the Sarbanes-Oxley Act imposed new compliance costs on companies and led some to reconsider the merits of trading on US exchanges.

A requirement for foreign companies to refile financial statements under US accounting standards has also reduced the attractiveness of US markets. But a new push to harmonise accounting standards announced today is likely to help bring that to an end.

European companies seeking to escape Sarbanes-Oxley were alarmed to discover a decades-old rule that said delisting their shares would not allow them to break free of the new corporate governance law. They still had to meet US requirements if they had more than 300 US-resident shareholders.

In December, the SEC proposed rule changes to make deregistration easier. The period for public comment on its proposals ends tomorrow. Leading business associations from the UK, France and Germany will tell the SEC in a joint letter the proposals would make a difference to too few companies. The SEC proposed that any company could deregister if US investors held 5 per cent or less of its shares.

For a large company, the regulator proposed to allow deregistration if US investors held 10 per cent or less of its shares and accounted for 5 per cent or less of daily trading volume.

Business associations say most companies would breach the proposed ownership thresholds because US institutions own a significant volume of European shares. Suggested solutions include removing the top five or 10 US shareholders from share ownership calculations, or linking deregistration only to thresholds for retail investor ownership. The SEC declined to comment. - (Financial Times service)