SEC reconsiders which foreign companies qualify for reporting shortcuts
Published Date: 6/9/2025
Proposed Rule
Summary
The SEC is thinking about changing the rules for foreign companies that want to be treated as 'foreign private issuers' (FPIs). These changes could affect which companies get special reporting breaks, helping investors and businesses grow. If you have thoughts, speak up by September 8, 2025!
Analyzed Economic Effects
3 provisions identified: 1 benefits, 1 costs, 1 mixed.
Large share of FPIs now trade almost only in U.S. markets
The SEC staff found that in fiscal year 2023 about 55% of 20-F reporting FPIs had 99% or more of their equity trading volume in U.S. capital markets (defined as less than 1% of equity trading volume outside the U.S. over a 12-month window). For fiscal year 2023, 967 issuers filed on Form 20-F and 146 filed on Form 40-F, and the aggregate global market capitalization of 20-F FPIs was about $9 trillion; median market cap per 20-F FPI was about $256 million. The most common incorporation jurisdiction in 2023 was the Cayman Islands (over 30% of 20-F FPIs) and the most common headquarters jurisdiction was mainland China (over 20% of 20-F FPIs).
Foreign issuers get reporting and accounting relief
If you run a foreign company that qualifies as a foreign private issuer (FPI), you currently get several filing and accounting relaxations: annual reports on Form 20-F are due four months after fiscal year-end (versus 60, 75, or 90 days for Form 10-K domestic filers), reporting FPIs are not required to file quarterly reports, and FPIs may present financials using IFRS or home country GAAP with a U.S. GAAP reconciliation. FPIs may also use Securities Act forms F-1, F-3, F-4 or Form 20-F for registrations and can avoid section 12(g) registration if they have fewer than 300 U.S. recordholders.
FPIs face less frequent governance and disclosure rules
If a company is an FPI, it is exempt from several governance and disclosure rules that apply to U.S. domestic issuers: FPIs are exempt from section 16 reporting, proxy solicitation requirements, and say-on-pay votes; they are not subject to Regulation Fair Disclosure; Sarbanes-Oxley certifications are required only in annual filings (not quarterly); and FPIs use Form 6-K "promptly after" information is made public instead of the four-business-day Form 8-K timing for domestic issuers. Additionally, certain registration timing rules permit FPIs to rely on interim or older audited financial statements (for example, audited annual statements may be as old as 15 months in some circumstances).
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Key Dates
Department and Agencies
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