Foreign Private Placement Issuers

ANTHONY, LINDER & CACOMANOLIS, PLLC offers extensive experience and deep knowledge to foreign companies seeking support for U.S. listings, dual listings, or SEC, NASDAQ, and NYSE/NYSE American disclosure requirements and capital market transactions.

Definition of Foreign Private Issuers

The Securities Act of 1933 (including amendments) and the Securities Exchange Act of 1934 (including amendments) define “foreign private issuers.”

Generally, companies that do not meet this definition are subject to registration and reporting obligations similar to those for U.S. companies. The qualifications of foreign private issuers are determined not only based on their home country but also on the location of their business, assets, management, and subsidiaries.

Main Criteria

1. Relative Holding Ratio of U.S. Stocks
2. Degree of business contact with the United States

Foreign private issuers qualify if less than 50% of their foreign shareholders are based in the United States. If more than 50% are located in the United States, qualifications are determined by considering the location, assets, and business activities of officers and directors.

Registration and Reporting Obligations

Like U.S. companies, foreign companies selling securities to U.S. investors must register or obtain exemption from registration.

Main Applicable Rules

• Regulation D (Rules 506(b) and 506(c))
• Regulation S
• Resale restrictions and exemptions under Section 4(a)(1) and Rule 144

After registration, foreign companies are subject to ongoing reporting obligations.

Special Rules Applicable to Foreign Private Issuers

1. You can choose US GAAP, IFRS, or adjusted national standards as financial statement preparation criteria.
2. Exemption from the Power of Attorney Regulation in Article 14
3. Exemption from reporting obligations and short selling restrictions under Article 16 (Article 13 is complied with)
4. Exemption from Regulation FD
5. Submission via the foreign only form (Form 20-F, Form F-1, Form F-3, Form F-4, Form F-6) is possible.

American Depositary Receipts (ADR)

ADRs represent ownership of American Depositary Receipts (ADS) in shares of foreign companies. It is traded in US dollars and settled in US DTC.

ADRs are always registered on Form F-6.

Securities Exchange Act Rule 12G3-2(b)

This rule allows foreign private issuers to avoid SEC reporting obligations when trading shares on the U.S. over-the-counter market.

As a condition, the issuer must have securities listed on major trading markets and must continuously publish the following information electronically in English:

• Business Performance
• Financial Status
• Business Changes
• Acquisition and disposal of assets
• Securities Issuance and Redemption
• Changes in Management and Directors
• Compensation and Major Transactions

Documents to be Submitted

• Annual report (including financial statements)
• Interactive Report (including financial statements)
• Press Release
• Communications and documents to each security holder

Technical Inquiries

The attorneys at ANTHONY, LINDER & CACOMANOLIS, PLLC have a thorough understanding of the needs of foreign private issuers.

Contact us now by email or by phone 877-541-3263.