The U.S. Securities Exchange Act of 1932 (the “Act“) include an exemption for a foreign private issuer (“FPI“) meaning a listed, non-U.S. company from having to register a class of equity securities with the Securities and Exchange Commission (“SEC“) as otherwise required by the Act. In this blog, you will find the solution on how FPIs can gain access to the world’s largest capital market –U.S. institutional and private investors – without the cost and complexity of an IPO (e.g. at the NYSE or on Nasdaq) and thereby save time and money.
First off, the exemption in the Act is immediately available assuming that the necessary requirements are fulfilled. The primary requirements to qualify for the exemption are as follows:
- The FPI is already listed in a non-U.S. jurisdiction on an approved exchange.
- The FPI is not subject to certain reporting obligations under the Act, which requirements is fulfilled by the vast majority of FPIs and means that FPI has not previously listed or publicly offered its shares in the US.
- The FPI publishes its disclosures electronically in English. This can simply be a translation of the FPI’s local language disclosure documents.
The FPI does not have to file separately for the exemption, and most FPIs can rely on their home market reporting for fulfilling the exemption.
By engaging an OTCQX Sponsor, such as the undersigned, FPIs can access U.S. investors and have their shares traded by a secondary market quotation on the OTCQX® Best Market through a cost-effective and simple process. This has been successfully achieved by international companies including:
- the Adidas Group;
- BNP Paribas;
- Danone;
- Heineken;
- Roche and many, many more.
Trading on the OTCQX Market indicates to investors that an FPI meets eligibility and disclosure standards, including that the FPI has high financial standards, follows best practice corporate governance, demonstrates compliance with U.S. securities laws, is current in its disclosure, and has a professional third-party sponsor introduction (that being the undersigned). Being traded on OTCQX gives international issuers the benefit of increased U.S. investor holding and an increase in liquidity and share value in both the home and OTC market.
If your company is interested in learning more about the advantages of trading on the OTCQX Market, please contact approved OTCQX Sponsor / attorney-at law Søren Brinkmann.
