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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