Foreign companies that want exposure to American markets sometimes go through the process of getting listed as a public company in the U.S. Other times, they become what is known as a foreign private issuer, or FPI for short. Foreign private issuers have the benefit of access to U.S. markets and certain friendly accommodations without having to go through the entire process of getting listed. Below, get an SEC foreign private issuers overview that includes the financial reporting requirements to know.
What Is a Foreign Private Issuer?
A foreign private issuer is a nongovernmental company that is incorporated outside of the U.S. and does business in the U.S.
The special status allows these foreign companies some disclosure and reporting benefits that publicly traded companies in the U.S. enjoy.
Foreign Private Issuer SEC Filing Requirements
FPIs are subject to SEC filing requirements in three use cases:
- Upon registering the ability to sell securities with the SEC
- Upon listing securities on a U.S. exchange
- Within a 120-day period of a fiscal year when the issuing company has assets worth over $10 million and equity shares held by over 2,000 persons
Rule 12g3-2(b) Exemption
There are exceptions to note, including Rule 12g3-2(b). As a reminder, Rule 12g3-2(b) exempts FPIs from needing to register securities if the securities are primarily traded outside of the U.S. The company may self-certify and does not need to request exception from the SEC in this instance.
Foreign Private Issuer Filing Forms
Exceptions aside, there are SEC forms foreign private issuers must complete. Here’s what foreign corporate issuers need to know about those forms:
- Form F-1: When an FPI intends to go public in the U.S., it must file this form.
- Form 20-F: Any FPI with shares listed on a U.S. exchange must file this form. Because Form 20-F includes fields that American-based publicly traded companies must fill out, it helps investors compare foreign and domestic companies when making investment decisions.
- Form 40-F: This form is similar to 20-F. However, it applies to Canadian companies only. Any other FPIs should use 20-F.
- Form 6K: This form is a cover page that FPIs should use whenever they make SEC filings. This form is intended as a catchall for any financial information that arises in between the required quarterly reports and the annual report. This form must be submitted in English and is required of all foreign private issuers.
By getting FPI status, companies enjoy access to U.S. markets while avoiding the lengthy process of becoming listed as a public company in the U.S. While it is a shortcut, in essence, there are financial reporting requirements to prepare for when it comes to FPIs.
SEC forms may be different from required financial reporting forms in a company’s home country. Accordingly, companies should leave themselves plenty of time to become familiar with the forms, the SEC filing process and all supporting documentation. One more recommendation is to identify financial reporting software well in advance. At DFIN, our signature ActiveDisclosure software supports financial reporting with features such as built-in security, health checks and end-to-end encryption.
To enable FPIs to improve their disclosure starting from the drafting process for their future filings in the evolving SEC Compliance landscape, in June 2023, DFIN hosted a webinar in partnership with Latham & Watkins and Ernst & Young on “SEC compliance for FPIs: 2023 mid-year update”. Click here to watch the webinar replay on-demand.