S-X 3-20(a)(2) requires that a U.S.-incorporated registrant will present its financial statements in U.S. dollars. These tests are found in Securities Act Rule 405 and Exchange Act Rule3b-4. About. As a result, securities sold initially pursuant to an exemption or safe harbor from registration may not then be resold unless either an exemption is available or the resale is then registered under the Securities Act. Foreign Private Issuer vs. U.S. In the discussion that follows, we present a general outline of various U.S. federal securities law issues applicable to Foreign Private Issuers, as well as additional matters these issuers may wish to take into account when considering having their securities trade in the U.S. capital markets. Two of the most frequently used means by which issuers make private or limited offerings are by the exemption provided in Securities Act Section 4(a)(2) and the safe harbor provisions outlined in Regulation D of the Securities Act. This is required by the SEC to report information that either: The company makes public pursuant to the law of its home country. Although specific exemptions exist with respect to both the type of security and type of transaction at issue, those most often relevant to foreign private issuers include offerings made on a limited basis (either not to the general public or outside the United States). Disclosures made by foreign private issuers are subject to special requirements under Regulation G and Item 10(e), which are discussed below. However, not all non-U.S. companies are FPIs. In this situation, the transaction, including financial statements of the other party to the transaction, must be reported on a Form 20-F within four business days of the completion of the transaction. [S-K 512(a)(4)] For this purpose, delayed or continuous offerings include business combination transactions registered on Form F-4, and takedowns from effective shelf registration statements. This requirement does not apply to financial statements under Item 17. Most recent interim period and corresponding prior year financial statements also would be reconciled to U.S. GAAP. This information does not have to be reconciled to US GAAP. The resale safe harbor under Regulation S is available for any securities of an issuer, not simply those initially acquired in a Regulation S transaction. Generally, foreign private issuers are permitted to deregister when trading volume in the U.S., rather than number of U.S. shareholders, falls below specified levels. [1] The next annual report on Form 20-F must include audited financial statements for this transition period. For example, if the issuer presents its financial statements in home-country GAAP with reconciliation to U.S. GAAP, then the amounts for the acquiree or investee in the numerator of the tests must be based on U.S. GAAP. However, these financial statements can be prepared either in the same currency as the issuer or in the currency that normally is used for preparation of such entities' financial statements. See Topic 10. [S-X 8-01] Note that scaled disclosure rules may be used only if the issuers file on a form available to U.S. domestic companies (e.g., Form 10-K). 6520.1Certain information is required to be disclosed under Item 18, but not Item 17. 6120.5With respect to Canadian registrants, IFRS has been incorporated into Canadian GAAP for publicly accountable enterprises for fiscal years beginning on or after January 1, 2011. If a foreign private issuer's disclosure of a non-GAAP financial measure is made contemporaneously both inside and outside the United States, Regulation G exempts the U.S. disclosure from Regulation . 6320.5IFRS filers need not apply SABs that related specifically to U.S. GAAP (e.g., SAB 104). Note that the reconciliation requirements do not apply to issuers filing audited financial statements prepared under IFRS as issued by the IASB. Some registrants have presented financial statements in more than one GAAP prior to their first-time adoption of IFRS as issued by the IASB; for example, in home-country GAAP in their local market and in U.S. GAAP in their SEC filings. While not considered inclusive of all acceptable alternatives, the following are examples of approaches that could provide an appropriate level of information to achieve a bridge between these annual and interim periods. 6630.1Financial information for all periods presented in the filing should be recast into the new reporting currency using a methodology consistent with ASC 830 (IAS 21 for IFRS filers). Prior to commencing review of initial registration statements, the staff may request confirmation that Appendix K was applied to the filing, as well as the name of the designated filing reviewer that the staff may contact with any questions concerning the application of those policies and procedures to the registration statement. shareholder bases reach certain levels. However, S-X Article 11 permits the ending date of the periods included for the target company to differ from those of the registrant by up to 93 days. As with all foreign private issuers, Canadian foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB need not reconcile to U.S. GAAP. Consideration should be given as to the appropriate currency in which the registrant should report. All reconciling items should be presented gross with a separate adjustment for taxes. However, in selecting accounting policies under IAS 8, a registrant may apply SABs that relate to U.S. GAAP and otherwise meet the IAS 8 requirements. Selected financial data should also include amounts under U.S. GAAP, if the primary financial statements are presented using home-country GAAP. Again, Form F-6 would be used to register the ADRs. Section 302 also requires these officers to certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of, the issuer's internal controls; they have made certain disclosures to the issuer's auditors and the audit committee of the board of directors about the issuer's internal controls; and they ha. In some cases, amounts from the acquiree's or investee's historical financial statements will need to be converted to the issuer's basis of accounting. (Last updated: 9/30/2011). NOTE: S-X 3-20 allows a foreign private issuer to file financial statements prepared in any currency that management believes is appropriate. Transition reports for foreign private issuers are filed on Form 20-F as follows: (Last updated: 9/30/2011). Exchange Act Sections 13(d) and 13(g) and corresponding Exchange Act Regulation 13D-G establish a comprehensive reporting system for information relating to an issuers beneficial ownership (generally defined as the direct or indirect ability to vote or dispose of voting equity securities registered under Section 12 of the Exchange Act). If the registrant subsequently decides to present IFRS as issued by the IASB financial statements in its SEC filings, it is not required to present the reconciliation from previous GAAP specified by IFRS 1 because it is no longer a first-time adopter subject to IFRS 1. Washington, DC 20549-3628 A foreign issuer - other than a foreign government - that does not meet the definition of a foreign private issuer must use the same registration and reporting forms as a domestic registrant. Accordingly, a domestic issuer can prepare financial statements of an acquiree or investee in U.S. dollars. The following table illustrates the basis of accounting on which the pro formas are presented under typical scenarios. These requirements are the same for foreign private issuers as for other companies. For each period presented, all measurements are retroactively restated to the purchasing power unit as of the date of the most recent balance sheet information in the filing. (202) 551-3450. When performing the analysis for directors, foreign companies should consider individuals that perform the functions generally performed by a board of directors of a U.S. company. Significance testing is based on the accounting used by the issuer. (Last updated: 6/30/2013). The request should also identify the comprehensive basis of accounting and reporting currency to be used in the companys financial statements, as well as the number of periods being reconciled to U.S. GAAP (if any). This reconciliation could be presented directly from U.S. GAAP to IFRS as issued by the IASB in a note to the audited financial statements, or if impracticable in an audited financial statement schedule, for the same dates and periods that the IFRS 1 reconciliation is presented. Pursuant to SEC rules and auditing standards, omission of a material item that is required to reconcile the financial statements to U.S. GAAP pursuant to Item 17 or Item 18 of Form 20-F, or any otherwise inaccurate presentation of that reconciliation, would require a clear reference in the auditor's report identifying the omission or inaccuracy. Foreign private issuers may provide financial statements prepared in accordance with U.S. GAAP, IFRS as issued by the IASB, or home country accounting standards that comprise a comprehensive basis of accounting. Under Exchange Act Section 12(g), Rule12g-1, and Rule 12g3-2(a), a foreign private issuer is generally required to register a class of equity securities if: In measuring the number of shareholders, issuers must "look through" the record ownership of brokers, dealers, banks, or nominees holding securities for the accounts of their customers, and consider any beneficial ownership reports or other information provided to the issuer in order to determine the residency of shareholders. Application of the age of financial statement rules may require the foreign target company to include in a Form S-4 a period in the pro forma information that would be more current than its separate historical financial statements. While not specifically referring to ASC 830, S-X 3-20 is designed to be conceptually consistent with that standard. [S-X 4-01(a)(2)] In both cases the filings should prominently disclose that the company meets the foreign private issuer definition but is voluntarily filing on domestic forms. NOTE: Compliance with Item 18 rather than Item 17 is required for all issuer financial statements in all Securities Act registration statements, Exchange Act registration statements on Form 20-F, and annual reports on Form 20-F. Note that SABs related to filing requirements and auditing continue to apply. 1 Twitter 2 Facebook 3RSS 4YouTube Dollar equivalent or convenience translations are generally not permitted, except that a convenience translation may be presented only for the most recent fiscal year and any subsequent interim period. [Item 3.A of Form 20-F and Instruction 2 to Item 3.A] See Section 10220.2 for guidance regarding selected financial data disclosure for EGCs. NOTE: Form 20-F provides two levels of reconciliation from a comprehensive basis of accounting other than U.S. GAAP to U.S. GAAP- Item 17 and Item 18. Certain information is required to be disclosed under Item 18, but not Item 17. Foreign private issuers filing a registration statement after electing to change their fiscal year end may need to provide more current audited financial statements than are required under the Exchange Act transition reporting rules in order to comply with the age of financial statement requirements in the registration statement.
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