Form F-1 Foreign Private Issuers and Going Public

A foreign private issuer going public can register an offering of securities under the Securities Act of 1933 (Securities Act) or may register a class of equity securities under the Securities Exchange Act of 1934 (Exchange Act), or both. In either case, the issuer must file a registration statement containing information required by the Security and Exchange Commission (SEC), and must become effective. Under the Securities Act, a registration statement contains a prospectus, along with other information required by the SEC’s regulations.

The SEC has adopted a series of forms available to foreign private issuers consisting of the “F” series registration statements and Forms 20-F and 6-K disclosure forms for annual and current reports. The disclosure forms available to foreign private issuers have been designed with reference to international disclosure standards, both in scope and timing requirements for filing. Most foreign private issuers opt to file under those forms instead of the forms available to domestic issuers.

While foreign private issuers may voluntarily choose to register and report using domestic forms (e.g., “S” series registration statements and Forms 10-K, 10-Q, and 8-K), they lose some of the provisions available to foreign private issuers using the foreign filing regime. Foreign private issuers using the domestic forms must meet the earlier filing deadline of Form 10-K, file Form 10-Q quarterly reports, and file Form 8-K current reports.

Form 20-F

Form 20-F is the primary disclosure document for foreign private issuers under both the Securities Act and the Exchange Act. Although Form 20-F is most often filed as an annual report under the Exchange Act, it is also a registration used to register classes of securities under the Exchange Act. The disclosure required by each Securities Act registration statement form cross-references the disclosure requirements of Form 20-F.

The disclosure requirements of Form 20-F are similar to those required of domestic issuers. However, there are a few significant differences, mostly regarding financial statement requirements and executive compensation disclosure.

These differences include:
 Foreign private issuers may provide financial statements prepared in accordance with U.S. GAAP, IFRS as issued by the IASB, or home country accounting standards that comprise a comprehensive basis of accounting. If a foreign private issuer prepares financial statements pursuant to home country accounting standards or non-IASB IFRS, it must also provide a reconciliation to U.S. GAAP, consisting of a discussion and quantification of the material differences between the financial statements presented and the requirements of U.S. GAAP.
 Foreign private issuers are permitted to disclose executive compensation on an aggregate basis and need not supply a Compensation Discussion & Analysis, as is required for domestic U.S. Issuers. To the extent a foreign private issuer discloses more extensive executive compensation information in accordance with home market requirements or voluntarily, such information must also be disclosed under Form 20-F.

Smaller Reporting Companies

If a foreign private issuer chooses to use the SEC’s domestic issuers forms, it may be able to present its disclosure in SEC filings in compliance with alternative, scaled disclosure requirements if it qualifies as a “smaller reporting company.” A Smaller Reporting Company is defined in Securities Act Rule 405 and Exchange Act Rule 12b-2 as a company with a public float (the aggregate value of shares of its voting and non-voting common equity held by non-affiliates) of less than $75 million. If an issuer has no common equity outstanding, or there is no market price for its outstanding common equity, it would qualify as a smaller reporting company if it had less than $50 million in revenues in the last fiscal year.

All eligible companies (including foreign private issuers) that elect to use the scaled disclosure regime for smaller reporting companies must file on the forms applicable to domestic issuers and present their financial statements in accordance with U.S. GAAP.

JOBS Act and The Creation of the Emerging Growth Company

The Jump Start Our Business Act (JOBS) created a new category of issuer known as the “emerging growth company,” which is defined in the Securities Act and the Exchange Act as an issuer with “total annual gross revenues” of less than $1 billion during its most recently completed fiscal year. Foreign private issuers that qualify as emerging growth companies may take advantage of applicable provisions of the JOBS Act to the same extent as U.S. companies.

The JOBS Act provides reduced disclosure requirements for emerging growth companies, including two years of audited financial data in the Securities Act registration statement for an initial public offering of common equity securities and no requirement for Sarbanes-Oxley Act Section 404(b) auditor attestations of internal control over financial reporting.

The JOBS Act also permits emerging growth companies to submit initial Securities Act registration statements for review on a confidential basis. This allows the staff to review and comment on the disclosure for certain issuers and the issuers to respond to staff comments before the public filing of a registration statement is made through the EDGAR system. A registration statement confidentially submitted to the staff must be complete in all material respects at the time of first submission. The staff will defer the review of an incomplete or deficient non-public registration statement.

In addition, Section 106 of the JOBS Act added Section 6(e) to the Securities Act under which an emerging growth company may confidentially submit to the Commission an initial registration statement under the Securities Act for confidential, non-public review by the Commission staff before public filing, provided that the initial confidential submission and all amendments thereto are publicly filed not later than 21 days before the date on which the issuer conducts a road show, as this term is defined in Securities Act Rule 433(h)(4).

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This information is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.

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Brenda Hamilton, Securities Attorney
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