The issue has taken on increased urgency as non-U.S. firms soon will face strict internal-control requirements that already apply to larger U.S. companies.

Non-U.S. companies have long complained that U.S. rules make it easy to enter U.S. markets, but almost impossible to leave - leading some to liken U.S. markets to a "roach motel" or the "Hotel California."

Securities and Exchange Commission Chairman Christopher Cox referred to the analogy to the song "Hotel California" (which, the lyrics say, "you can never leave") at Wednesday's SEC meeting, calling it a great song but "a lousy business model."

Current rules make it difficult for non-U.S. companies to exit U.S. markets if they have 300 or more shareholders in the United States. In such cases, companies may delist shares but still have to file quarterly and annual results to the SEC and shareholders. The proposal floated by the United States would scrap that standard for an approach that would vary depending on the size of the company and whether it has issued debt or stock in the United States.

Small, foreign companies eligible for the new exit policy would be free to leave if U.S. residents hold no more than 5 percent of the company's shares. Large, well-known non-U.S. companies would be free to leave if U.S. residents hold no more than 10 percent of a company's shares and average daily trading volume in the United States doesn't exceed 5 percent of the average in the company's home market.

Under the proposal, non-U.S. companies would be eligible to exit only if they have been in the United States for at least two years, have filed at least two annual reports, haven't sold securities in the United States in a public or private offering in the past year and remain listed on an exchange in their home country.

Debt issuers would be free to leave if their debt is held by fewer than 300 worldwide or in the United States and they have filed at least one annual report in the United States.

SEC Commissioner Paul Atkins said the proposed changes go a long way toward addressing concerns raised by non-U.S. companies, but shouldn't unleash "a mass exodus" if adopted. He predicted non-U.S. companies might be more willing to enter U.S. markets in the first place if they know "there is a way out."

Final adoption of the proposal requires a second vote of the five-member Commission.

-- JUDITH BURNS (Dow Jones Newswires)