SEC Invites Public Comment on Revising the Definition of "Foreign Private Issuer"

Strategic Insights -

The Securities and Exchange Commission (SEC) has published a concept release inviting public comment on revising the definition of "foreign private issuer" (FPI) in light of changes in the demographics of FPIs since the definition was originally adopted. The release highlights how the FPI population has evolved over time, with significant implications for non-U.S. companies accessing U.S. capital markets. Chairman Paul Atkins has emphasized the need for careful consideration of the FPI definition, given the increasing number of companies that are not subject to meaningful disclosure requirements or securities law oversight in their home country jurisdictions. The SEC is concerned that this regulatory mismatch may undermine investor protections and reduce market transparency.

Key Takeaways:

  • The SEC's concept release invites public comment on revising the definition of "foreign private issuer" (FPI) in light of changes in the demographics of FPIs since the definition was originally adopted.
  • The release highlights how the FPI population has evolved over time, with significant implications for non-U.S. companies accessing U.S. capital markets.
  • Chairman Paul Atkins has emphasized the need for careful consideration of the FPI definition, given the increasing number of companies that are not subject to meaningful disclosure requirements or securities law oversight in their home country jurisdictions.
  • The SEC is concerned that this regulatory mismatch may undermine investor protections and reduce market transparency.
  • The concept release includes six potential approaches to revising the FPI definition, including updating the existing eligibility criteria, adding a non-U.S. trading volume requirement, and requiring FPIs to maintain a primary listing on a major non-U.S. exchange.
  • The 90-day comment period will end on September 8, 2025, and will inform the SEC's next steps and any future rulemaking.

Statistics:

  • 48% of FPIs had different jurisdictions for incorporation and headquarters in 2023, compared to only 7% in 2003.
  • Approximately 55% of reporting FPIs had little to no trading on non-U.S. markets and appear to maintain their listings only on U.S. securities exchanges, effectively making the United States their exclusive or primary trading market.
  • The SEC is increasingly concerned that this regulatory mismatch may undermine investor protections and reduce market transparency.
  • The comment period will end on September 8, 2025.

Sources:

  • Securities and Exchange Commission, Concept Release on the Definition of "Foreign Private Issuer" (June 4, 2025).
  • Mondaq Ltd.