SEC to revisit foreign private issuer definition

Current regulatory accommodations afforded to foreign private issuers (FPIs) were premised on the SEC’s understanding that most FPIs would be subject to meaningful disclosure and regulatory requirements in their home country markets. According to the SEC, the FPI population may no longer reflect the issuers intended to benefit from the FPI accommodations. These developments in the FPI population since the Commission’s last broad review of the FPI framework has prompted it to consider revising the eligibility criteria for FPI status.

Applicability

SEC Release Nos. 33-11376; 34-103176, Concept Release on Foreign Private Issuer Eligibility and related fact sheet.
Companies currently qualifying as or seeking to qualify as a foreign private issuer under the federal securities laws

Relevant dates

Comments should be submitted on or before September 8, 2025.

Foreign issuers that qualify for FPI status under the federal securities laws benefit from accommodations that provide relief from requirements for domestic issuers. The current accommodations and exemptions afforded to FPIs were based on an understanding that most FPIs traded their securities in their home markets and were subject to meaningful disclosures and regulatory requirements in their home country jurisdictions.

The SEC recently performed an analysis of the FPI population and observed significant changes in the population since 2003 – particularly the composition of home country jurisdictions (incorporation and headquarters) and relative volume of equity securities traded in the US capital markets. These changes prompted the SEC to consider whether the current FPI definition should be revised so that the intended issuers are benefiting from the FPI accommodations.

On June 4, 2025, the SEC issued a concept release, which is the first step in the SEC rulemaking process, requesting public comment on potential changes to the definition of a foreign private issuer. The Commission is seeking to ensure the accommodations for foreign issuers are appropriately tailored to reflect today’s FPI population while continuing to protect investors and promote capital formation.

Current FPI definition

A foreign issuer (other than a foreign government) can qualify:

if 50% or less of its outstanding voting securities are held of record directly or indirectly by US residents; or
if more than 50% of its outstanding voting securities are held by US residents, and it has none of the following contacts with the United States: (1) a majority of its executive officers or directors are US citizens or residents; (2) more than 50% of its assets are located in the United States; or (3) its business is administered principally in the United States.

In the concept release, the SEC shared its findings from a recent review of the population of FPIs, citing changes between 2003 (the first year of electronic filing) and 2023 they considered significant. Those changes included:

A substantial shift in the jurisdictional composition of FPIs – In 2003, the most common jurisdictions both in terms of incorporation and headquarters were Canada and the United Kingdom. In 2023, the most common jurisdiction of incorporation was the Cayman Islands and the most common jurisdiction of headquarters was China. The SEC noted that FPIs with differing jurisdictions of incorporation and of headquarters shifted from 7% in 2003 to 48% in 2023.
A shift in the global trading of equity securities becoming more concentrated in the US capital markets – Approximately 55% of the FPI population had little to no trading of securities on any non-US market and appear to maintain listings of their equity securities only on US national securities exchanges.

The Concept Release

The concept release includes general and specific questions seeking foundational input on:

whether the accommodations afforded to FPIs should continue to apply to the companies captured by the current definition, and
if not, how should the definition be changed in light of the changes in the population.

The possible areas of amendments include the following:

updating the existing FPI eligibility criteria (e.g. modifying the tests described in the current definition to lower percentages of US resident ownership);
adding a foreign trading volume requirement (e.g. establishing minimum volumes to ensure foreign presence and an annual test);
adding a “major foreign exchange” listing requirement (e.g. establish definitions and criteria for a “major foreign exchange” and require listing);
incorporating an SEC assessment of foreign regulation applicable to the FPI (e.g. require incorporation or headquarters in a jurisdiction with a robust regulatory framework, similar to criteria established for “major foreign exchange”);
establishing new mutual recognition systems (e.g. similar to mutual recognition approach for Canadian issuers under the Multijurisdictional system “MJDS”); and
adding an international cooperation arrangement requirement (e.g. FPI certifies it is incorporated in a jurisdiction where it is subject to the oversight of a foreign securities authority that has signed the “IOSCO Multilateral Memorandum of Understanding Concerning Consultation, Cooperation, and the Exchange of Information”).

In addition to these potential areas of amendment, the SEC asks for input on other considerations that would result from a change in the definition of FPI (e.g. loss of FPI status requiring change to US GAAP, transition period for adoption, and understanding impacts to US investors).

The SEC invites comment on these and other aspects of the current FPI definition, including the Staff’s review of the trends in the FPI population. The comment period closes September 8, 2025.