ARTICLE
17 February 2017

SEC Releases New Interpretations Relevant For Foreign Private Issuers

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A&O Shearman

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A&O Shearman was formed in 2024 via the merger of two historic firms, Allen & Overy and Shearman & Sterling. With nearly 4,000 lawyers globally, we are equally fluent in English law, U.S. law and the laws of the world’s most dynamic markets. This combination creates a new kind of law firm, one built to achieve unparalleled outcomes for our clients on their most complex, multijurisdictional matters – everywhere in the world. A firm that advises at the forefront of the forces changing the current of global business and that is unrivalled in its global strength. Our clients benefit from the collective experience of teams who work with many of the world’s most influential companies and institutions, and have a history of precedent-setting innovations. Together our lawyers advise more than a third of NYSE-listed businesses, a fifth of the NASDAQ and a notable proportion of the London Stock Exchange, the Euronext, Euronext Paris and the Tokyo and Hong Kong Stock Exchanges.
On 8 December 2016, the SEC released new C&DIs, certain of which are applicable to foreign private issuers, providing greater certainty for companies seeking to establish or maintain a US listing.
United States Corporate/Commercial Law

On 8 December 2016, the SEC released new C&DIs, certain of which are applicable to foreign private issuers, providing greater certainty for companies seeking to establish or maintain a US listing. In particular, the new C&DIs provide guidance on the determination of "foreign private issuer" status, including:

  • how to determine the proportion of a company's voting securities that are owned of record by US residents, for the purposes of both foreign private issuer status and the safe harbor available under Regulation S;
  • how to determine the US citizenship or residency status of directors and officers; and
  • how to determine whether more than 50% of a company's assets are located in the US and whether a company's business is administered principally in the US.

The new interpretations also address SEC registration statement and reporting rules for debt securities (i) that are issued by a subsidiary that is not a foreign private issuer and guaranteed by a foreign private issuer parent and (ii) that are issued by a foreign private issuer parent and guaranteed or co-issued by subsidiaries that are not foreign private issuers. In both cases, the company can use an F-series registration statement to register the offering and Form 20-F to comply with Exchange Act reporting obligations going forward.

Exchange Act Rule 12g-3 details the process for a non-SEC reporting issuer to succeed to the reporting obligations and registration of a registered issuer in connection with a merger or similar transaction that qualifies as a succession. The new interpretations clarify that when both parties are foreign private issuers, the initial filing evidencing the succession should be a Form 6-K filed using the Form 8-K submission type that is appropriate to the transaction.

The new interpretations clarify the requirements for a foreign private issuer to terminate its Exchange Act registration and reporting obligations under Rule 12h-6, which requires, among other things, that the primary trading market for the securities be outside the United States. For the primary trading market determination, the EU can be considered as a single foreign jurisdiction.

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