Does a Foreign Company File a Registration Statement To Go Public?
Under federal securities laws, a foreign company that meets the definition of the Securities and Exchange Commission (SEC) of a foreign private issuer must register an offering of its securities under the Securities Act of 1933, as amended (Securities Act) or a class of securities under the Securities Exchange Act of 1934 (the “Exchange Act”) or both, if:
- The foreign private issuer conducts a public offering of its securities in the U.S.
- The foreign private issuer seeks to list a class of its securities listed on a national securities exchange
- The foreign private issuer’s size; or
- The foreign private issuer has a certain number of shareholders.
The registration statement requirements are determined by whether the foreign private issuer is registering a particular securities offering or a class of securities. After a registration statement under either the Securities Act or the Exchange Act is effective, the filing company becomes subject to SEC’s periodic reporting requirements, and must file reports with SEC. Form 20-F is the primary disclosure document for foreign private issuers under both the Securities Act and the Exchange Act. Although Form 20-F is most often filed as an annual report under the Exchange Act, it is also used to register classes of securities under the Exchange Act.
What Is a U.S. Public Offering?
Under the federal securities laws, an offer or sale of securities must be registered pursuant to the Securities Act or exempt from such registration. If no exemption or safe harbor is available, offers and sales by foreign issuers must be subject to a registration statement under the Securities Act.
U.S. Listing For Foreign Issuers
Under Section 12(b) of the Exchange Act, a foreign issuer must file a registration statement under the Exchange Act for its securities to be listed on a national securities exchange such as the New York Stock Exchange, the NYSE Amex and the NASDAQ Stock Market.
Interdealer Quotation Systems – The OTC Markets
Among other things, the OTC Markets requires that companies quoted on the OTCQB must be required to file reports with the SEC under the Exchange Act. To meet this requirement, issuers may voluntarily register a class of securities under Section 12(g) of the Exchange Act. Once registered pursuant to Section 12(g), the issuer must file periodic and current reports with the SEC.
Foreign private issuers may also register a class of securities under Section 12(g) to facilitate trading in the over-the-counter markets such as the OTC Markets OTCQB.
Asset and Shareholder Thresholds; Rule 12g3-2(b) Exemption
Foreign private issuers are required to register a class of equity securities under the Exchange Act pursuant to the Exchange Act Section 12(g), Rule 12g-1, and Rule 12g3-2(a), if the issuer has:
- Over $10 million in assets as of the end of its fiscal year;
- Either 2,000 or more shareholders, or 500 shareholders who are not accredited investors; and
- 300 or more U.S. resident shareholders.
In determining the number of shareholders, issuers must “look through” the record ownership of brokers, dealers, banks, or nominees holding securities for the accounts of their customers, and consider any beneficial ownership reports or other information provided to the issuer in order to determine the residency of shareholders.
Rule 12g3-2(b), provides a self-executing exemption from the SEC’s registration statement requirements of Section 12(g) if all three conditions below are met:
(1) The foreign private issuer is not required to file reports under Exchange Act Sections 13(a) or 15(d) (such obligations arising generally as a result of a public offering of securities, a listing on a national securities exchange, or voluntary registration under the Exchange Act);
(2) The foreign private issuer maintains a listing of the subject class of securities on one or two exchanges in a non-U.S. jurisdiction(s) that comprise more than 55% of its worldwide trading volume (its “Primary Trading Market”); and
(3) The foreign private issuer publishes in English on its website (or through an electronic information delivery system generally available to the public in its Primary Trading Market) material items of information that:
(a) It has made public or been required to make public pursuant to the laws of the country of its incorporation, organization or domicile;
(b) It has filed or been required to file with the principal stock exchange in its Primary Trading Market on which its securities are traded and which has been made public by that exchange; or
(c) It has distributed or been required to distribute to its security holders.
To establish the 12g3-2 exemption initially, the foreign private issuer must have published electronically in English, its non-U.S. disclosure documents published since the first day of its most recently completed fiscal year. To maintain the 12g3-2 exemption, the foreign private issuer’s non-U.S. disclosure documents must be electronically published in English on its website on an ongoing basis.
For further information, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real South, Suite 202 North, Boca Raton, FL, (561) 416-8956, or by email at [email protected]. This securities law Q & A is provided as a general or informational service to clients and friends of Hamilton & Associates Law Group, P.A. and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Going Public Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855