SEC’s Call for Public Comment on Amending the FPI Definition

On June 4, 2025, the Securities and Exchange Commission (the “SEC”) issued a release requesting public comment on the definition of Foreign Private Issuer (“FPI”).  FPIs benefit from exemptions that provide full or partial relief from certain disclosure and filing requirements under U.S. federal securities laws.

Under the current definition, an FPI is any company that is a foreign issuer, other than a foreign government, except for an issuer meeting the following conditions (as of the last business day of its most recently completed second fiscal quarter): (i) more than 50% of its outstanding voting securities are directly or indirectly held by U.S. residents, and any of the following: (A) a majority of its executive officers or directors are U.S. citizens or residents; (B) more than 50% of its assets are located in the U.S.; or (C) its business is administered principally in the U.S.

The FPI definition has not changed since 2003 and there have been significant changes in the population of FPIs since then. The release notes how significantly the FPI landscape has changed over the past several decades. The release further seeks public input on the following potential approaches to amending the FPI definition:

• An update to the existing FPI eligibility criteria. The SEC could modify the various tests used to determine whether a foreign issuer is eligible for FPI status by either adjusting the U.S. holder threshold or revising the “business contacts” criteria currently considered.
• A foreign trading volume requirement. Adopting a new foreign trading volume requirement test could require FPIs to assess their foreign and U.S. trading volume on an annual basis and impose a minimum percentage of foreign trading volume to maintain FPI status.
• A major foreign exchange listing requirement. A major foreign exchange listing requirement would require FPIs to be listed on a major foreign exchange.
• An SEC assessment of foreign regulation applicable to the FPI. This possible SEC assessment could require FPIs to be incorporated or headquartered in a jurisdiction where the SEC has determined there is a robust regulatory and oversight framework for issuers.
• Establishing new mutual recognition systems. The SEC could establish new mutual recognition systems with respect to registration under the Securities Act of 1933, as amended, and periodic reporting under the Securities Exchange Act of 1934, as amended, for FPIs from selected jurisdictions. These systems would be similar to the mutual recognition approach under the current Multijurisdictional Disclosure System for Canadian issuers.
• Adding an International Cooperation Arrangement requirement. An international cooperation arrangement requirement could require FPIs to certify that they are either incorporated or headquartered in a jurisdiction with a securities authority that has signed the IOSCO Multilateral Memorandum of Understanding Concerning Consultation, Cooperation, and the Exchange of Information.

The release also sets forth 69 questions for consideration. The SEC is requesting comments on all aspects of the release, including potential regulatory responses. The public comment period will remain open for 90 days following publication of the release in the Federal Register. Any changes to the SEC’s current rules will require the SEC to propose new or revised rules, solicit public comments, then adopt final rules.

This summary is provided for informational purposes only and is not intended to constitute legal advice nor does it create an attorney-client relationship with Rimon, P.C. or its affiliates.

Christine Wilson represents sponsors and investors in forming, investing in, and operating private funds. Her practice focuses on representing sponsors of leading venture capital, private equity, crypto, real estate, energy and other private funds in their global fundraising activities, investments, operations and exits. She has experience structuring internal sponsor arrangements, including general partner and management company vehicles, team compensation and succession planning, as well as co-investment arrangements for her sponsor clients. In addition to her sophisticated sponsor-side practice, she represents institutional and high-net worth investors in their private investment activities. Read more here.

Nicole Kalajian (a.k.a. “The Connector”) is a Honolulu-based attorney providing full-coverage legal services to international clientele. Nicole leverages Rimon’s presence in over 50 locations, 11 countries, and 5 continents, as well as local and global alliances, to service the varied needs of her sophisticated client base.  Whatever the legal need, Nicole works diligently to ensure that her clients have appropriate and effective legal coverage. Read more here.