SEC Publishes Handbook For Foreign Issuers: “Accessing U.S. Capital Markets”

This month the SEC released a handbook for foreign companies interested in registering and issuing securities on U.S. exchanges. The handbook, titled “Accessing the U.S. Capital Markets – A Brief Overview for Foreign Private Issuers,” explains the eligibility requirements for “foreign private issuer” status and the unique registration and reporting rules that apply to foreign companies.

In general, any foreign company is free to list its securities on U.S. exchanges so long as it complies with the securities laws like a domestic company. But certain foreign companies can enjoy a special set of rules, some of which relax reporting and registration requirements, if they qualify as a “foreign private issuer.” The SEC’s handbook explains the basic standard for eligibility under Regulation C and Rule 3b-4, the two-pronged “shareholder test” and “business contacts test.”

The handbook also describes the benefits of qualifying as a “foreign private issuer,” including exemption from some proxy rules, exemption from the disclosure requirements of Regulation FD, and autonomy over accounting standards and reporting forms. Foreign private issuers nevertheless must report and register their securities, and the handbook outlines the individualized rules that apply. Because foreign companies may be unfamiliar with U.S. securities laws, the SEC offers the option to submit “confidential” filings that will be reviewed by the staff and returned with comments. The handbook also discusses the standard forms for foreign issuers, the process of deregistration, and exemptions for offerings made outside the U.S.