Foreign Private Issuer Status: The Two-Part Test That Determines U.S. Securities Reporting Obligations
Foreign Private Issuer Status: The Two-Part Test That Determines U.S. Securities Reporting Obligations
Inside Securities Law with Frederick M. Lehrer
For companies organized outside the United States, foreign private issuer (FPI) status is one of the most important classifications under U.S. securities law. It determines which Securities and Exchange Commission (SEC) reporting requirements, disclosure obligations, and regulatory accommodations may apply.
In this episode of Inside Securities Law, securities attorney and former SEC enforcement attorney Frederick M. Lehrer explains the two-part test used to determine whether a foreign company qualifies as a foreign private issuer.
Incorporation outside the United States does not automatically guarantee FPI status. Under SEC rules, a foreign company generally loses eligibility when both of the following conditions are met:
- More than 50% of its outstanding voting securities are held of record, directly or indirectly, by U.S. residents.
- At least one additional U.S. business-contact condition applies: a majority of its executive officers or directors are U.S. citizens or residents, more than 50% of its assets are located in the United States, or its business is administered principally in the United States.
Why Foreign Private Issuer Status Matters
FPI classification can significantly affect a company's SEC reporting framework, including eligibility for Forms 20-F and 6-K, disclosure accommodations, and certain exemptions available to qualifying foreign issuers.
The central distinction is between where a company is incorporated and the actual composition of its shareholders, management, assets, and business operations.
Key Takeaway
Foreign private issuer status is a regulatory classification, not simply a geographic designation. Companies operating across international borders must evaluate their eligibility under the SEC's specific ownership and business-contact requirements.
About Frederick M. Lehrer
Frederick M. Lehrer is a securities attorney and former enforcement attorney with the U.S. Securities and Exchange Commission. He served at the SEC from 1984 to 2000, including nine years as an enforcement attorney, and has practiced securities law privately since 2000.
He advises U.S. and international companies on SEC compliance, securities offerings, registration statements, public company reporting, capital raising, corporate transactions, and going-public matters.
He is the host of Inside Securities Law and author of The Other Side of the Table: What Nine Years of SEC Enforcement Teach Issuers About Disclosure, Capital, and Going Public.
Links & Resources
Frederick M. Lehrer — Official Website
https://securitiesattorney1.com/
https://securitiesattorney1.com/
Inside Securities Law — Podcast
https://fredlehrer.transistor.fm/
https://fredlehrer.transistor.fm/
SEC — Information About Foreign Issuers
https://www.sec.gov/divisions/corpfin/internatl/foreign-private-issuers-overview.shtml
https://www.sec.gov/divisions/corpfin/internatl/foreign-private-issuers-overview.shtml
This podcast provides general educational information about U.S. securities law and does not constitute legal advice.
Topics: Foreign Private Issuer, FPI Status, U.S. Securities Law, SEC Reporting, International Securities Law, Form 20-F, Form 6-K, Foreign Companies, SEC Compliance, Frederick M. Lehrer.