Alternatives to Form S-1 for Foreign Companies to Go Public Direct in the U.S.

Foreign companies, if they qualify as what the SEC defines as “foreign private issuers” have the option but not the obligation utilize another set of laws, rules and regulations to Go Public in the United States.

They do not have to use the traditional Form S-1.  Instead, they can use other forms and in the long run be subject to much less SEC regulation, saving thousands or even hundreds of thousands of dollars.

The Foreign Company must Qualify as a Foreign Private Issuer

The term foreign private issuer means any foreign company other than a foreign government that meets the following conditions as of the last business day of its most recently completed second fiscal quarter:

  • Less than 50 percent of the outstanding voting securities of such issuer are directly or indirectly owned of record by residents of the United States; and
  • Any of the following:
    • Less than the majority of the executive officers or directors are United States citizens or residents;
    • Less than 50 percent of the assets of the company are located in the United States; or
    • The business of the company is not administered principally in the United States.

A foreign private issuer can elect to be treated as a domestic U.S. company and follow the same rules and regulations as U.S. issuers, meaning filing Form S-1 to go public.  But it does not have to.

Alternate Forms For Foreign Companies That Are Foreign Private Issuers:  Form F-1 Or 20-F

We can take Foreign companies that are foreign private issuers public in the U.S. with Form F-1 or Form 20-F.

The disclosure requirements for the F forms are not found in Regulation S-K as for the S Forms but instead are primarily found in another form for foreign private issuers, Form 20-F, which is also used for on-going SEC filing requirements. Although the items to be disclosed in Form F-1 are essentially the same as those in Form S-1, there are subtle distinctions and differences.  Set forth below is a summary of the information we will need to prepare these filings.

  • Prospectus Summary
  • Identity of Directors, Senior Management and Advisors
  • Offer Statistics and Expected Timetable
  • Key Information

   A. Selected Financial Data

   B. Risk Factors

   C. Forward-Looking Statements

  • Information on the Company

   A. History and Development of the Company

   B. Business Overview

   C. Organizational Structure

   D. Property, Plant and Equipment

  • Unresolved Staff Comments
  • Operating and Financial Review and Prospects

   A. Operating Results

   B. Liquidity and Capital Resources

   C. Off-Balance Sheet Arrangements

   D. Tabular Disclosure of Contractual Obligations

  • Directors, Senior Management and Employees

   A. Directors and Senior Management

   B. Compensation

   C. Board Practices

   D. Employees

   E. Share Ownership

  • Major Shareholders and Related Party Transactions

   A. Major Shareholders

   B. Related Party Transactions

  • Financial Information

   A. Legal and Administrative Proceedings

   B. Dividends

   C. Significant Changes

  • The Offer and Listing

   A. Trading

  • Additional Information

   A. Memorandum and Articles of Incorporation

   B. Material Contracts

   C. Exchange Controls

   D. Taxation

   E. Documents On Display

  • Quantitative and Qualitative Disclosures about Market Risk
  • Description of Securities Other than Equity Securities
  • Defaults, Dividend Arrearages and Delinquencies
  • Material Modifications to the Rights of Security Holders and Use of Proceeds
  • Controls and Procedures

   A. Audit Committee Financial Expert

   B. Code of Ethics

   C. Principal Accountant Fees and Services

   D. Exemptions from the Listing Standards for Audit Committees

   E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

  • Financial Statements
  • Indemnification of Directors and Officers.
  • Recent Sales of Unregistered Securities.
  • Exhibits and Financial Statement Schedules.
  • Undertakings

Significant Advantages to being a Foreign Private Issuer

Foreign private issuers do not have to file all of the SEC reports that U.S. companies are required to file.  Foreign private issuers do not have to file Forms 10-Q quarterly, 10-K annually or 8-K when required.  Instead, they file one form, Form 20-F, once a year.

Foreign private issuers are not subject to ownership reporting and so officers, directors and major shareholders do not have to file ownership reports on Forms 3, 4 or 5 or Schedule 13-D.

Foreign private issuers are not subject to SOX requirement.

In short, there are significant cost savings for Foreign companies in going public as a foreign private issuer.

As always, if you want more information about this topic or anything else related to going public, please contact us.

A NOTE ABOUT “GO PUBLIC DIRECT:”   Over a decade ago, I coined the term Go Public Direct.  At the time, many small businesses and their advisors thought the only way to go public was a reverse merger with a public shell. Thankfully, today, most know better.  But for those who still don’t, you can Go Public Direct, without a reverse merger with a public shell.  My firm will show you how, as we have shown many before you.

Although I suppose I should be flattered, my competition now attempts to co-opt the term “Go Public Direct” [if you search the term on Google, competitors place ads above my organic site listing, and some even have go so far as to write and circulate articles with the term in the headline, for goodness sakes!].  My concern, however, that their intent may be to confuse my potential clients into believing that they are me.  THEY AREN’T.

There is only one firm with the original “Go Public Direct,” going public without a reverse merger with a public shell.  It’s even our website name:  www.gopublicdirect.com.  So don’t be confused or misled; if you want a real Go Public Direct Transaction, you need to contact us.

Thanks,  Michael T. Williams, Esq.

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