Doing business in... USA's SEC announces new rules for foreign issuers

8 December 2011, unedited.

Registration statements for public offerings and U.S. listings by public companies are generally available to the public through the EDGAR system. The Division of Corporation Finance staff recognizes that foreign private issuers and foreign governments often face unique circumstances when accessing U.S. public markets in connection with the initial registration of their securities under the Securities Act of 1933 or the Securities Exchange Act of 1934. The Division has afforded to foreign private issuers and foreign governments the ability to submit to the staff registration statements and amendments on a non-public basis in connection with their first-time registration with the Commission, permitting the staff to review and comment on disclosure, and the issuer to respond to staff comments, before a public filing is made through the EDGAR system.

Historically, the majority of foreign private issuers registering securities with the Commission also had or were having their securities traded on a foreign securities exchange, and the foreign market ordinarily did not have a practice of requiring public disclosure of the registration statement before completion of review. More recently, however, the vast majority of foreign private issuers using this non-public review procedure did not and were not contemplating listing securities outside the United States.

The Division believes it is appropriate to limit its policy with respect to the non-public submission of initial registration statements by foreign private issuers. Beginning today, the staff will review initial registration statements of foreign issuers that are submitted on a non-public basis only where the registrant is: (1) a foreign government registering its debt securities; (2) a foreign private issuer that is listed or is concurrently listing its securities on a non-U.S. securities exchange; (3) a foreign private issuer that is being privatized by a foreign government; or (4) a foreign private issuer that can demonstrate that the public filing of an initial registration statement would conflict with the law of an applicable foreign jurisdiction. In addition, shell companies, blank check companies and issuers with no or substantially no business operations will not be permitted to use the non-public submission procedure. This change in policy will promote transparency and investor protection.

Foreign issuers should be aware that circumstances may develop in which the staff will request a foreign issuer to publicly file its registration statement even though it comes within the general parameters of the policy. Examples of these circumstances include a competing bid in an acquisition transaction or publicity about a proposed offering or listing.

Non-public submissions that do not come within one of the above categories and that were received by the staff before today will continue to be reviewed by staff without a public filing. The next draft of the registration statement, whether in response to comments issued by the staff or otherwise, must be filed on the EDGAR system.

Foreign issuers are reminded that, when non-public registration statements are submitted to the staff, the document must be complete. In order to facilitate staff receipt and review of non-public submissions of registration statements and other submitted materials, the Division has established a dedicated e-mail box for the receipt of all registration statements and other submitted materials under these procedures. The address of this e-mail box is oicf_fpi_submissions@sec.gov. The timing and scope of staff review of non-public submissions of registration statements is generally the same as for publicly filed registration statements.

Foreign issuers are also reminded that the non-public submission of a registration statement does not constitute the filing of a registration statement under the Securities Act of 1933. Under Section 5(c) of the Securities Act, offers of securities cannot be made in the United States until a registration statement is publicly filed with the Commission using the EDGAR system.

The Division’s Office of International Corporate Finance should be contacted in advance of any non-public submission under these procedures. Questions may be addressed to any staff attorney in the Office of International Corporate Finance at 202-551-3450, or submitted through the Division’s web-based question form at: https://tts.sec.gov/cgi-bin/corp_fin_interpretive.

The staff will continue to assess use of the procedure and may make changes in the future.