Statement On Concept Release On Foreign Private Issuer Eligibility, Paul S. Atkins, SEC Chairman, June 4, 2025

Good afternoon.  This is an open meeting on June 4, 2025 of the U.S. Securities and Exchange Commission under the Government in the Sunshine Act.  Commissioners Caroline Crenshaw and Mark Uyeda are here with me in Washington, D.C., and Commissioner Hester Peirce is participating remotely.

Today, the Commission will consider a recommendation from the Division of Corporation Finance that the Commission issue a concept release seeking comment on whether to revise the definition of foreign private issuer.

The Commission first defined foreign private issuer in 1967.[1]  Then in 1983, it developed the foundation of the current definition through a test to determine whether a foreign issuer is “essentially [a] U.S. issuer” based on percentage of U.S. ownership, nationality of the management team, and location of business operations.[2]  The world, financial markets, and corporate legal structures have significantly changed over the past forty-plus years.

The U.S. capital markets have been and still are the envy of the world.  Foreign companies from across the globe seek new capital from U.S. investors for their businesses and seek to have their securities listed on a U.S. exchange for a variety of potential benefits, including higher valuation, greater liquidity, and enhanced reputation.

Foreign companies that qualify as foreign private issuers receive these potential benefits while also being offered several accommodations under the federal securities laws that are not available to U.S. companies.  These include provisions such as (1) not needing to file quarterly reports, proxy statements, or Section 16 reports, (2) not being subject to Regulation FD, and (3) furnishing current reports on Form 6-K, rather than filing the more prescriptive Form 8-K.[3]

As early as 1935, the Commission recognized that our rules should not treat foreign companies exactly the same as domestic companies,[4] likely because many aspects of their corporate operations, business and market practices, accounting standards, tax regimes, compensation and pension benefits, and organic corporate governance laws may be quite different from those in the United States.  Yet, at the same time, the Commission has always been mindful of the paramount need for the adequacy of the disclosures provided by the foreign companies to their U.S. investors whenever it considered new accommodations under the federal securities laws for these companies.  When the Commission provided foreign companies with additional regulatory relief in 1967, it noted “the improvement in the reporting of financial information by foreign issuers, resulting from changes in foreign corporate laws, stock exchange requirements, and voluntary disclosure by the companies themselves.”[5]

Today, maintaining reasonable accommodations in the federal securities laws to attract foreign companies to U.S. markets and to provide U.S. investors with the opportunity to trade in those companies under U.S. laws and regulations remains an objective.  That objective must be balanced with other considerations, including providing investors with material information about these foreign companies, including their unique corporate structures, and ensuring that domestic companies are not competitively disadvantaged with respect to regulatory requirements.

The first step in striking this balance is to determine which foreign companies should qualify as foreign private issuers and be able to avail themselves to the accommodations.  It has been several decades since the Commission last examined the characteristics of the foreign private issuer community.  The global markets have changed significantly in those decades.  It is therefore only prudent for the Commission to better understand the companies that are using the foreign private issuers accommodations today and determine if changes are needed to better protect U.S. investors.  Based on the latest data from 2023, for example, almost 55% of foreign private issuers are traded exclusively, or nearly-exclusively, in the United States.[6]  Among these issuers, the most common jurisdiction of incorporation is the Cayman Islands and the most common jurisdiction of headquarters is China.[7] 

When the United States is effectively a foreign company’s exclusive or primary trading market and the company is not subject to meaningful disclosure requirements or securities law oversight in its jurisdiction of incorporation or headquarters, careful consideration should be given to whether the foreign company is eligible for accommodations under the federal securities laws that are unavailable to U.S. companies.  This analysis begins with considering whether the current definition of a foreign private issuer is appropriately tailored.  The concept release solicits public input on this issue, and I encourage market participants to submit their views and engage with my office and the other commissioners’ offices on this topic.

Before I turn the meeting over to Cicely LaMothe, Acting Director of the Division of Corporation Finance, to discuss the recommendation, I would like to thank the following staff members for their work on this concept release.

From the Division of Corporation Finance: Cicely LaMothe, Sebastian Gomez Abero, Ted Yu, Michael Coco, Kelsey Glover, Kateryna Kuntsevich, Mark Green, Ryan Milne, Wei Lu, Heather Rosenberger, Kayla Roberts, Anna Abramson, and John Fieldsend.

From the Division of Economic and Risk Analysis: Lyndon Orton, Mattias Nilsson, Evan Avila, Tara Bhandari, and Timothy Dodd.  I would especially like to recognize Mattias and Evan because the data in their white paper on trends in the foreign private issuer population[8] significantly contributed to the concept release.

From the Office of International Affairs: Kathleen Hutchinson, Matthew Greiner, Morgan Macdonald, Michael Ferrario, Jordan Spain, and Katerina Ossenova.

From the Office of the General Counsel: Jeffrey Finnell, Bryant Morris, Johanna Losert, Mike Killoy and Cynthia Bien.

From the Office of the Chief Accountant:  Ryan Wolfe, Shaz Niazi, Nigel James, Chauncey Martin, Mai-Khoi Nguyen-Thanh, Jill Davis, Sarah Esquivel, and Ella Karafiat.

Now I will turn the meeting over to Cicely for the staff’s recommendation.