Concept Release on Foreign Private Issuer Eligibility

SECURITIES AND EXCHANGE COMMISSION <CFR>17 CFR Parts 230, 239, 240, and 249</CFR> <DEPDOC>[Release Nos. 33-11376; 34-103176; File No. S7-2025-01]</DEPDOC> <RIN>RIN 3235-AN35</RIN> <SUBJECT>Concept Release on Foreign Private Issuer Eligibility</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Securities and Exchange Commission. <HD SOURCE="HED">ACTION:</HD> Concept release; request for comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Securities and Exchange Commission (“Commission”) is publishing this concept release to solicit comments on the definition of a foreign private issuer (“FPI”). There have been several developments within the FPI population since the Commission last conducted a broad review of reporting FPIs and the eligibility criteria for FPI status. These developments have prompted us to consider whether the current FPI definition should be revised so that it better represents the issuers that the Commission intended to benefit from current FPI accommodations while continuing to protect investors and promote capital formation. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments should be received on or before September 8, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments may be submitted by any of the following methods: <HD SOURCE="HD2">Electronic Comments</HD> • Use the Commission's internet comment form ( <E T="03">https://www.sec.gov/rules/submitcomments.htm</E> ); or • Send an email to <E T="03">rule-comments@sec.gov</E> . Please include File Number S7-2025-01 on the subject line. <HD SOURCE="HD2">Paper Comments</HD> • Send paper comments to Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. <FP> All submissions should refer to File Number S7-2025-01. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method of submission. The Commission will post all comments on the Commission's website ( <E T="03">https://www.sec.gov/rules/proposed.shtml</E> ). All comments received will be posted without change. Comments are also available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Operating conditions may limit access to the Commission's Public Reference Room. Do not include personally identifiable information in submissions; you should submit only information that you wish to make available publicly. The Commission may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. </FP> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Kelsey Glover, Special Counsel, or Kateryna Kuntsevich, Special Counsel, in the Office of International Corporate Finance, Division of Corporation Finance, at (202) 551-3450, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. </FURINF> <SUPLINF> <HD SOURCE="HED"> SUPPLEMENTARY INFORMATION: </HD> <HD SOURCE="HD1">Table of Contents</HD> <EXTRACT> <FP SOURCE="FP-2">I. Introduction</FP> <FP SOURCE="FP-2">II. The Current FPI Definition and Regulatory Accommodations</FP> <FP SOURCE="FP1-2">A. History of the FPI Definition and Regulatory Framework</FP> <FP SOURCE="FP1-2">B. Summary of Current FPI Accommodations</FP> <FP SOURCE="FP-2">III. Recent Developments in the FPI Population</FP> <FP SOURCE="FP1-2">A. FPI Population Overview</FP> <FP SOURCE="FP1-2">B. FPI Jurisdictions of Incorporation and Headquarters</FP> <FP SOURCE="FP1-2">C. FPI Reliance on U.S. Capital Markets</FP> <FP SOURCE="FP1-2">1. U.S. Percentage of Global Trading</FP> <FP SOURCE="FP1-2">2. FPIs Trading Almost Exclusively in U.S. Capital Markets</FP> <FP SOURCE="FP-2">IV. Reassessment of the FPI Definition</FP> <FP SOURCE="FP1-2">A. Background</FP> <FP SOURCE="FP1-2">B. Potential Regulatory Responses</FP> <FP SOURCE="FP1-2">1. Update the Existing FPI Eligibility Criteria Request for Comment</FP> <FP SOURCE="FP1-2">2. Foreign Trading Volume Requirement Request for Comment</FP> <FP SOURCE="FP1-2">3. Major Foreign Exchange Listing Requirement Request for Comment</FP> <FP SOURCE="FP1-2">4. Commission Assessment of Foreign Regulation Request for Comment</FP> <FP SOURCE="FP1-2">5. Mutual Recognition Systems Request for Comment</FP> <FP SOURCE="FP1-2">6. International Cooperation Arrangement Requirement Request for Comment</FP> <FP SOURCE="FP1-2">C. Other Considerations Request for Comment</FP> <FP SOURCE="FP-2">V. Regulatory Planning and Review</FP> <FP SOURCE="FP-2">VI. Conclusion</FP> </EXTRACT> <HD SOURCE="HD1">I. Introduction</HD> The Commission has long recognized that foreign issuers  <SU>1</SU> <FTREF/> face unique challenges in accessing U.S. capital markets and over the years has sought to provide such issuers with regulatory flexibilities  <SU>2</SU> <FTREF/> that preserve access for U.S. investors to such issuers' securities while maintaining appropriate investor protections. Foreign issuers that qualify for FPI status  <SU>3</SU> <FTREF/> under the Federal securities laws benefit from accommodations that provide full or partial relief from requirements for domestic issuers. When the Commission adopted the regulatory framework governing FPIs, it did so with a recognition that foreign issuers were subject to different circumstances than domestic issuers due to the laws and practices imposed by their home country jurisdictions and, as a result, certain accommodations were necessary, and that FPIs' securities would be traded in foreign markets. <SU>4</SU> <FTREF/> Updates to the FPI accommodations since their adoption have reflected an understanding that, while legal and regulatory requirements differ across home country jurisdictions, most eligible FPIs would be subject to meaningful disclosure and other regulatory requirements in their home country jurisdictions. <SU>5</SU> <FTREF/> <FTNT> <SU>1</SU>   <E T="03">See infra</E> section II.A for the definition of a “foreign issuer.” </FTNT> <FTNT> <SU>2</SU>   <E T="03">See</E> Release No. 34-323 (July 15, 1935) (“An endeavor has been made to adapt the requirements for domestic issuers to the peculiar circumstances of foreign issuers. In view of the disparity between the laws and practices existing in the several countries it was necessary to introduce great flexibility in the requirements.”), Release No. 34-324 (July 15, 1935), Release No. 34-325 (July 15, 1935), and Release No. 34-412 (Nov. 6, 1935) (together, the “1935 Releases”); <E T="03">Registration of Foreign Securities,</E> Release No. 34-7746 (Nov. 16, 1965) [30 FR 14737 (Nov. 27, 1965)] (describing an in-depth study of foreign regulatory requirements that the Commission undertook prior to adopting various foreign issuer accommodations, including an assessment of the extent of the trading market for foreign securities in the United States, the disclosure and reporting requirements and practices in many of the countries whose issuers have securities traded in the United States, the requirements of many leading foreign stock exchanges, and the nature of the information presently furnished to the Commission and noting that “the Commission will continue to observe developments in foreign disclosure practices to determine whether the proposed rules and forms should be modified in the future”); <E T="03">Rules, Registration and Annual Report Form for Foreign Private Issuers,</E> Release No. 34-16371 (Nov. 29, 1979) [44 FR 70132 (Dec. 6, 1979)] (“Form 20-F Adopting Release”) (“[T]he Commission recognizes that there are differences in various national laws and businesses and accounting customs which the Commission should take into account when assessing disclosure requirements for foreign issuers.”); <E T="03">Foreign Issuer Reporting Enhancements,</E> Release No. 33-8900 (Feb. 29, 2008) [73 FR 13403, 13405 (Mar. 12, 2008)] (“[W]e acknowledged that differences in the national laws and accounting regulations applicable to foreign private issuers should be considered when establishing disclosure requirements for foreign private issuers. . . . Foreign private issuers are subject to different legal and regulatory requirements in their home jurisdictions, and as a result frequently follow different corporate governance practices from domestic companies.”). </FTNT> <FTNT> <SU>3</SU>  A “foreign private issuer” is a foreign issuer other than a foreign government, except for an issuer that as of the last business day of its most recently completed second fiscal quarter has more than 50% of its outstanding voting securities directly or indirectly held of record by U.S. residents and meets any of the following: a majority of its executive officers or directors are citizens or residents of the United States, more than 50% of its assets are located in the United States, or its business is principally administered in the United States. 17 CFR 230.405; 17 CFR 240.3b-4. </FTNT> <FTNT> <SU>4</SU>   <E T="03">See</E> Release No. 34-323, <E T="03">supra</E> note 2; Release No. 34-412, <E T="03">supra</E> note 2 (concerning foreign issuer exemptions from reporting requirements under 15 U.S.C. 78p (“section 16”) of the Exchange Act, the Commission noted that “comparatively few foreign corporations have stock listed on American exchanges, and even in such cases the principal market is rarely in this country.”). </FTNT> <FTNT> <SU>5</SU>   <E T="03">See, e.g., supra</E> note 2; <E T="03">Adoption of Rules Relating to Foreign Securities,</E> Release No. 34-8066 (Apr. 28, 1967) [32 FR 7845 (May 30, 1967)] (“[T]o assure that American investors would have available adequate information about [foreign] issuers, the Commission made an extensive st ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 168k characters. 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