Tag: Foreign Private Issuers

Commissioner Uyeda calls for development of guiding principles for foreign company disclosure requirements

Are the regulations applicable to foreign companies in for a reassessment? You might draw that conclusion from reading the remarks from SEC Commissioner Mark Uyeda at the Harvard Law School Program on International Financial Systems, 2024 U.S.-China Symposium last week.  Uyeda observes that, from its earliest days, the SEC has “recognized the unique nature of foreign companies accessing the U.S. capital markets, and its rules have afforded different treatment to foreign companies,” such as different forms for registration and reporting. But more recently, the SEC has applied several of its rules equally to domestic and foreign companies, an approach that, in Uyeda’s view, is inconsistent and suffers from the absence of a “clearly articulated regulatory philosophy.” He advises that the SEC should step back and undertake a more comprehensive review with a view toward the development of guiding principles—a “philosophy for when disclosure by foreign companies should be equivalent to disclosure by U.S. companies.” In particular, he advocates that the SEC reexamine the definition of “foreign private issuer”: while a test based on ownership and management may have made sense in 1983, does it still “reflect the realities of today’s global capital markets, corporate structures, and business practices”?

Will Congress subject insiders of FPIs to Section 16?

I don’t normally study defense appropriations bills, but the folks at thecorporatecounsel.net blog apparently do.  And good thing, too.  As they point out, Section 6081 of the new National Defense Authorization Act for Fiscal Year 2024 would amend Section 16(a)(1) of the Exchange Act to make insiders of foreign private issuers subject to Section 16. In effect, the amendment would eliminate the longstanding exemption from Section 16 set forth in Exchange Act Rule 3a12-3 applicable to securities registered by FPIs. In July, the bill passed the House (H.R. 2670) and then passed the Senate with amendments (S. 2226).  In theory, the bill is in or headed to conference to resolve differences. However, with the reigning dysfunction in Congress and likely government shutdown, who knows when anything will happen with this bill—or whether the provision will survive?