Foreign companies planning a US IPO: FPI status matters

From the IFRS Institute – September 15, 2026

Authors: Ingo Zielhoff, Vaibhav Poddar

Foreign Private Issuer (FPI) Initial Public Offering (IPO) activity in the US reached a five-year high in 2025. Volume dipped in 2026 but capital raised per IPO was significantly higher than in 2025.

Foreign companies going public in the US with FPI status can access a range of SEC accommodations- from less frequent reporting to the ability to report under IFRS^® Accounting Standards without reconciling to US GAAP. However, a foreign company has to qualify for FPI status and FPI eligibility is tested both before and after an offering and annually. Further, in June 2025, the SEC issued a concept release seeking to revisit the eligibility criteria. This article explains how FPI status is determined, how FPIs are treated differently from domestic issuers and what a US listing readiness journey involves for foreign companies.

KPMG IFRS Institute recently held a webcast covering FPI requirements and the US IPO process. We have summarized the key considerations and challenges highlighted by our panelists during the session, which can be leveraged to assist in your own IPO process. For those who weren’t able to join the live session, a replay is available here.

A US IPO is a strategic choice, not just the preparation of a registration statement. A fundamental question is whether the company will be considered an FPI or a domestic registrant by the SEC. FPI status comes with certain benefits and requirements, which we explain in more detail. Beyond that, the IPO journeys of FPIs and domestic registrants share many commonalities; a readiness program often requires coordination across financial reporting, controlling, tax, treasury, legal, governance, internal controls, human resources, systems, investor relations and external advisors. Management should ask several questions early: Can the company produce reliable financial information on a public-company timetable? Are accounting policies and technical positions documented? Are systems capable of supporting timely reporting? Which key performance indicators will be used externally? Are governance and disclosure processes sufficiently developed? Is there a credible roadmap for internal control over financial reporting?

A readiness journey typically begins 12 to 18 months before a transaction and encompasses accounting and reporting, tax, governance, internal controls, systems, people and investor relations. Companies may not complete all enhancements before the IPO but should ensure that they are in compliance with SEC rules and regulations before trading begins, and the quality of the information released to investors is sufficiently robust.

For many foreign companies considering a US listing, determining whether they qualify as an FPI is one of the earliest and most consequential IPO-readiness questions. FPI status affects more than the form used to register securities with the SEC. It can influence the financial reporting framework, the timing and frequency of SEC reporting, the staleness of financial statements included in a registration statement and the compliance obligations after listing. Many first-time foreign registrants may also qualify as emerging growth companies (EGCs) and may be eligible for additional accommodations. We explain how status is determined and provide an overview of the FPI accommodations and the related criteria.

Qualifying as an FPI

A company incorporated outside the US generally qualifies as an FPI¹ if US residents, directly or indirectly, hold 50% or less of its outstanding voting securities, also known as the shareholder test. Under the business contacts test, a company failing the shareholder test still qualifies as an FPI, if none of the following apply:

a majority of its executive officers or directors are US citizens or residents;
more than 50% of its assets are located in the US; or
its business is administered principally in the US.

Although the test is seemingly straightforward, the analysis may require judgment. Companies with significant US investors (including those held through custodians, e.g. broker-dealers and banks), US-resident founders or directors, or meaningful US operations should document the analysis rather than assume that non-US incorporation is sufficient. The status determination is made as of a date within 30 days before filing the initial registration statement for an IPO.

Maintaining FPI status

FPI status is not a one-time IPO checklist item. After a company becomes public, it is retested annually as of the last business day of the second fiscal quarter. A company that loses FPI status may continue using FPI forms for the remainder of that fiscal year but beginning on the first day of the following fiscal year, it generally transitions to domestic issuer reporting.

For example, a company with a December 31 year-end that lists in 2026 would next test its status on June 30, 2027. If it fails, it could continue using FPI forms for the rest of 2027 and would transition to domestic issuer reporting on January 1, 2028. In that case, the annual report for fiscal 2027, filed in 2028, would generally be on Form 10-K rather than Form 20-F because the domestic issuer regime applies from January 1, 2028. That transition may include quarterly reporting, current reporting on Form 8-K, proxy rules, Regulation FD and, in many cases, transition to US GAAP reporting for all periods presented.

Companies whose ownership, management, assets or headquarters activities are nearing the FPI eligibility thresholds should monitor shareholder ownership, board and management composition, asset location and headquarters activities throughout the IPO journey and after listing. If a change in status is reasonably possible in the near term, management should begin preparing early for domestic issuer reporting. This includes assessing parallel US GAAP reporting, drafting SEC Regulation S-X-compliant financial statements, determining Form 10-Q/Form 10-K processes and considering related controls.

Financial reporting and auditor readiness

Financial reporting choices are central to the IPO work plan. FPIs may report under US GAAP, IFRS Accounting Standards as issued by the IASB, or local GAAP with a reconciliation to US GAAP. Companies already reporting under IFRS Accounting Standards should still assess whether their financial statements, accounting policy disclosures and auditor's report satisfy the SEC requirement to refer to IFRS Accounting Standards as issued by the IASB. Compliance with a jurisdictional endorsement of IFRS Accounting Standards may require additional analysis.

A Form F-1 registration statement generally looks to the Form 20-F financial statement requirements: three years of audited statements of comprehensive income, changes in equity and cash flows and two years of balance sheets. Key accommodations provided are as follows:

Situation	Accommodation
FPI that is also an EGC	May provide two years of financial statements
First-time SEC filer using local GAAP	US GAAP reconciliation required only for two years and any required interim period in the initial registration statement; an additional year is added prospectively in a subsequent annual filing.
First-time IFRS adopter	In an initial registration statement, may omit the earliest of the three years of statements of profit or loss and other comprehensive income, changes in shareholders’ equity and cash flows.
First-time US GAAP filer	In an initial registration statement, may omit the earliest of the three years of financial statements if that information has not been included in a previous SEC filing.

Auditor readiness is equally important. Financial statements included in a US registration statement generally need to be audited in accordance with Public Company Accounting Oversight Board (PCAOB) auditing standards by a PCAOB-registered auditor that satisfies SEC and PCAOB independence requirements. Foreign companies sometimes discover that relationships or services permissible under local private-company standards create issues under SEC independence rules. For a foreign auditor, solely in an FPI’s initial registration statement, Regulation S-X Rule 2-01 permits independence under SEC and PCAOB rules for at least the most recent audited fiscal year, provided the auditor was independent under local standards for earlier periods.

Further, the SEC generally will not accept a qualified audit opinion or disclaimer of opinion, making it important to resolve any such modifications before a US offering. Engaging the auditor early can help avoid late-stage surprises related to independence, PCAOB reporting language, comfort letters or consents.

Other key financial statement requirements

Interim reporting

FPIs are not required to file quarterly reports on Form 10-Q. After listing, interim financial information is generally furnished on Form 6-K when it is made public under home-country law, filed with a stock exchange or distributed to security holders.

However, interim financial information may still be needed in a registration statement. For example, interim financial statements are required if the registration statement becomes effective more than nine months after the last audited year-end (see ‘Financial statement staleness’ below). Those interim statements generally cover at least the first six months of the subsequent financial year.

Regulation S-X considerations

FPI disclosure is anchored primarily in Form 20-F, but Form F-1 also cross-references Regulation S-X, Regulation S-K and Form 20-F for specific disclosure requirements. As a result, companies preparing for a US IPO should not view Form 20-F in isolation. In practice, areas such as Management's Discussion and Analysis (MD&A) and non-GAAP financial measures often require particular attention and remain frequent areas of SEC staff comment and may involve Regulation S-K requirements. See ‘Management’s Discussion and Analysis’ below for further details.

Financial statement staleness

A financial statement ‘goes stale’ when it becomes too old to be used in a registration statement without adding more recent annual or interim financial statements. FPI financial statements generally go stale more slowly than those of domestic issuers, which may provide a meaningful timing benefit in an IPO.

Topic	Practical implication
Audited annual financial statements	For FPIs, the last audited year generally cannot be more than 15 months old at offering or listing; IPOs generally use a 12-month filing rule unless an exception applies.
Interim financial statements	FPIs generally add interim financial statements if effectiveness occurs more than nine months after the last audited year end.
Comfort letters	The 135-day limit on an auditor providing negative assurance may call for more recent statements than the staleness rules alone, so in practice the comfort letter often drives the timetable.

For example, if an FPI is still within the applicable staleness window, it may be able to continue the SEC review process without refreshing the audited financial statements, while a domestic issuer in a similar timetable might need more recent interim financial statements before effectiveness.

Acquisitions can create unexpected IPO challenges

Companies pursuing acquisitions should assess SEC financial statement requirements early. Significant acquisitions may require target financial statements and pro forma information in the registration statement. For acquired foreign businesses, important accommodations may apply: no US GAAP reconciliation is required if the target reports under IFRS Accounting Standards as issued by the IASB and no reconciliation is required below 30% significance. Where a reconciliation is required, the less extensive requirements of Item 17 of Form 20-F may generally apply rather than Item 18 of Form 20-F.

The best time to address these issues is during deal negotiation with legal counsel’s involvement.

Management's discussion and analysis

For many private companies, MD&A, referred to in Form 20-F as Operating and Financial Review and Prospects (OFR), is a new discipline. A traditional fluctuation analysis is not sufficient. MD&A should explain the business from management's perspective, including the drivers of operating results, liquidity and capital resources, known trends and uncertainties, key performance indicators and material judgments.

Common SEC comments often focus on non-GAAP measures and disclosures that lack company-specific insights. FPIs reporting under IFRS Accounting Standards may benefit from a reduced critical accounting estimates disclosure when those matters are already addressed in the financial statements. Companies should draft MD&A before the registration statement is filed, pressure-test whether the narrative is specific and balanced, and ensure that the financial statements, MD&A and investor materials tell a consistent story.

Internal controls and SOX

Material weaknesses are common for private companies entering the public markets. Their existence is not necessarily fatal to a transaction, but companies need a credible and detailed remediation plan. IPO readiness should therefore include internal control design and documentation, testing of design and operating effectiveness over an appropriate period, disclosure controls and procedures, and an implementation roadmap for Sarbanes-Oxley Act (SOX) compliance.

For FPIs, SOX compliance is often less immediate than companies expect, but preparations should still begin early. Like other new public companies, an FPI generally is not required to include management’s assessment of internal control over financial reporting under Section 404(a) or the related Section 404(b) auditor attestation in its first annual report after becoming subject to Exchange Act reporting. After that transition period, management’s assessment is generally required, including from an FPI that also qualifies as an EGC.

The separate auditor attestation requirement under Section 404(b) generally requires a non-EGC accelerated or large accelerated filer to include, in its annual report, a report from its registered public accounting firm expressing an opinion on the effectiveness of the company’s internal control over financial reporting. FPIs that are non-accelerated filers, and FPIs that qualify as EGCs are not required to provide the auditor attestation report.

FPIs provide senior management certifications annually with Form 20-F rather than quarterly as required for domestic issuers that file Form 10-Q.

In June 2025, the SEC issued a concept release² exploring potential changes to the FPI eligibility framework. The release reflects the SEC's concerns on whether the existing accommodations remain appropriate given changes in the FPI population, including companies that are listed only in the US.

The SEC discussed possible approaches, including lower US ownership thresholds, foreign trading volume requirements, major foreign exchange listing requirements, an assessment of home-country regulation, a mutual recognition model and requirements tied to international regulatory cooperation. No rule change has been adopted, and a concept release is not a proposal. Separately, the SEC has proposed optional semiannual reporting for public companies that currently file Form 10-Q together with changes intended to simplify age-of-financial-statement rules. If adopted, these proposals would not change FPI eligibility, but they could narrow some practical differences between FPI and domestic issuer reporting. Companies considering a US IPO should monitor developments on both fronts.

FPI status remains a real advantage: less frequent reporting, a slower staleness clock and the ability to report under IFRS Accounting Standards without US GAAP reconciliation. However, each accommodation is subject to conditions and several may be narrower in practice. Companies evaluating a US IPO should assess FPI status early, determine which accommodations apply and build a 12-to-18-month readiness plan that addresses financial statements, acquisitions, MD&A, internal controls and auditor considerations. They should also engage their auditors early on independence, PCAOB registration and financial statement staleness considerations. Finally, foreign companies should monitor the SEC's concept release because the definition of an FPI, unchanged for decades, is now under active review.

Footnotes

¹ A company that meets the definition is an FPI for SEC purposes. An FPI may elect to use domestic issuer forms, but it must then comply with all requirements applicable to those forms.

² Release Nos. 33-11376; 34-103176; File No. S7-2025-01