Securities offerings and listings in the US: an ... - Latham & Watkins

Chapter 1 – Key statutes and concepts• Regulation FD: Regulation FD (fair disclosure)requires issuers to make public disclosure of anymaterial non-public information that has beenselectively disclosed to securities industry professionals(for example, analysts) or shareholders. 25 TheRegulation provides that when a domestic US issuer,or someone acting on its behalf, discloses materialnon-public information to certain persons (includinganalysts, other securities market professionals andholders of the issuer’s securities who could reasonablybe expected to trade on the basis of the information),it must make simultaneous public disclosure of thatinformation (in the case of intentional disclosure) orprompt public disclosure (in the case of nonintentionaldisclosure). 26Foreign private issuers are expressly exempt fromRegulation FD. 27 But foreign private issuers that filereports with the SEC typically consider complying withRegulation FD (at least in part), particularly since therestrictions in their home jurisdictions in many casesoverlap with Regulation FD’s requirements.• Accelerated filing: Under the accelerated filing rulesadopted by the SEC in 2002, seasoned domestic USfilers will eventually be required to file annual reports60 days after the end of their fiscal year. 29 Foreignprivate issuers are not subject to accelerated filing,and accordingly may file annual reports report withinsix months of the end of their fiscal year. 30 A foreignprivate issuer that chooses, however, to file the sameforms with the SEC that are required for domesticUS issuers will be subject to accelerated filing. 31• Sarbanes-Oxley Act exemptions: Although theSarbanes-Oxley Act generally does not distinguishbetween domestic US issuers and foreign privateissuers, the SEC has adopted a number of significantexemptions for the benefit of foreign private issuersin its rules under the Sarbanes-Oxley Act. Theseexemptions cover areas such as: (i) audit committeeindependence; (ii) black-out trading restrictions(Regulation BTR); (iii) use of non-Gaap financialmeasures (Regulation G); and (iv) certification ofinterim reports.Practice point:Regardless of the exemption from Regulation FD,foreign private issuers remain exposed to potential liabilityfrom selective disclosure, for example from“tipping” securities analysts or selected shareholders.• Beneficial ownership reporting; short-swing profitrecapture rules: Under Section 16(a) of the ExchangeAct, anyone who owns more than 10% of any class ofequity security registered under the Exchange Act, orwho is an officer or director of an issuer of such asecurity, must file a statement of beneficial ownershipwith, and report changes in beneficial ownership to,the SEC. Similarly, Section 16(b) requires any suchshareholder, officer or director to disgorge to theissuer profits realized on purchases and sales withinany period of less than six months. Securities offoreign private issuers are exempt from Section 16. 28www.iflr.comUS SECURITIES OFFERINGS: A GUIDE FOR NON-US ISSUERS5