SEC Considers Narrowing Foreign Private Issuer Definition

On June 4, 2025, the Securities and Exchange Commission (“SEC” or “Commission”) unanimously voted to publish a concept release[1] (the “Concept Release”) seeking public comment on issues related to the definition of a foreign private issuer (“FPI”).

The definition of an FPI is important to non-U.S. companies because it determines whether such companies can be listed within the United States while benefitting from a series of regulatory accommodations. These accommodations reduce the burden of certain SEC and exchange listing rules applicable to U.S. companies, facilitating non-U.S. companies’ access to the U.S. capital markets.

The Concept Release expresses concern that the current FPI definition allows certain non-U.S. entities to avoid effective regulatory oversight, potentially disadvantaging U.S. companies, FPIs subject to meaningful home country oversight and U.S. investors. The Commission is considering whether to narrow the eligibility criteria for FPIs in an effort to ensure that non-U.S. companies selling securities and listing in the United States are subject to meaningful regulatory requirements, either in their home jurisdictions or in the United States.

This alert memo provides an overview of the existing FPI regime, summarizes the key elements of the Concept Release and discusses potential implications for FPIs, investors and other interested parties.

The Existing FPI Framework

An FPI[2] is currently defined as an entity incorporated outside the United States unless:

1. More than 50% of its outstanding voting securities are directly or indirectly owned by U.S. residents (referred to as the “shareholder test”); and
2. Any of the following applies (referred to as the “business contacts test”):
   • The 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.

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