美股招股观察

The Controlling Test Is Foreign Private Issuer Status

The choice between Form S-1 and Form F-1 depends on whether the issuer is a foreign private issuer under Rule 405 of Regulation C. It does not depend merely on nationality, a red-chip or PRC background, or the issuer’s place of incorporation.

A company incorporated under the laws of a foreign country is not automatically a foreign private issuer. It must satisfy Rule 405. Conversely, a company incorporated in a state, territory, or possession of the United States can never qualify as a foreign private issuer, regardless of the location of its shareholders, assets, or management.

Rule 405 therefore controls the analysis before the applicable registration form can be selected.

How Rule 405 Applies the Two-Part Test

Rule 405 defines a foreign private issuer as a foreign issuer, other than a foreign government, that is not excluded by two linked conditions.

The first condition concerns record ownership. It applies where more than 50% of the outstanding voting securities are directly or indirectly owned of record by residents of the United States. The second condition concerns US contacts. An issuer within that ownership group is excluded from foreign private issuer status if any one of the following applies:

The majority of its executive officers or directors are United States citizens or residents.
More than 50% of its assets are located in the United States.
Its business is administered principally in the United States.

The two conditions operate together. More than 50% United States-resident record ownership disqualifies an issuer only when at least one of the three US-contact circumstances is also present. If 50% or less of the outstanding voting securities are held by United States residents, the issuer satisfies the ownership limb. If more than 50% are held, none of the three US-contact circumstances may apply for the issuer to remain a foreign private issuer.

Put differently, the issuer must not fall within the Rule 405 exclusion. Foreign organization is only a starting point. Shareholding structure and the three forms of US contact determine whether that foreign issuer qualifies.

For the business-contact condition, relevant factors may include the locations of the company’s principal business segments or operations, board and shareholders meetings, headquarters, and most influential key executives. Those factors inform the inquiry; they do not replace the stated test in Rule 405.

How the Record-Ownership Inquiry Works

The ownership percentage is determined by reference to voting securities held of record, directly or indirectly, by residents of the United States.

A foreign company may limit its inquiry concerning the amount represented by accounts of customers resident in the United States to brokers, dealers, banks, and other nominees located in three jurisdictions:

The United States.
The issuer’s jurisdiction of incorporation.
The jurisdiction that is the primary trading market for the issuer’s voting securities, if different from the issuer’s jurisdiction of incorporation.

This is a defined inquiry scope. It does not permit an issuer to disregard holdings represented through relevant nominees in those jurisdictions.

The rule also provides a fallback. If, after reasonable inquiry, the issuer cannot obtain information about the amount of shares represented by accounts of customers resident in the United States, it may assume that those customers are residents of the jurisdiction in which the nominee has its principal place of business. The presumption is permissive and applies where the required information remains unavailable after reasonable inquiry.

Why a Non-Foreign Private Issuer Falls on the Form S-1 Side

The SEC Division of Corporation Finance states that a company that does not qualify as a foreign private issuer is subject to the same registration and disclosure requirements applicable to domestic U.S. entities.

That result determines the form in this comparison. An issuer outside the Rule 405 definition cannot use Form F-1 because Form F-1 is reserved for foreign private issuers. For an ordinary securities offering in the Form S-1 versus Form F-1 comparison, Form S-1 is therefore the relevant domestic issuer form.

The analysis does not turn on whether a foreign issuer would prefer the Form F-1 disclosure structure. Eligibility comes first. Form selection follows from the issuer’s status under Rule 405.

What Form F-1 Actually Covers

The Form F-1 instruction states that the form shall be used for securities of all foreign private issuers, as defined in Rule 405 (§230.405), “for which no other form is authorized or prescribed.” Form F-1 is therefore not the default form for every foreign company.

The instruction also provides a separate exclusion. Form F-1 shall not be used for an offering of asset-backed securities, as defined in 17 CFR §229.1101. Both the foreign private issuer requirement and the absence of another authorized or prescribed form must therefore be addressed.

For the disclosure framework, Form F-1 directs registrants to Regulation S-K (§229.22) and Form 20-F (§249.220f) for the applicable requirements. Form 20-F is an annual report form, not a prospectus form.

This is a difference in the applicable disclosure framework. It is not accurate to describe Form F-1 as deleting particular chapters from Form S-1. The forms are not drafted as a simple set of full chapters plus omitted chapters. The subsidiary provision also demonstrates the distinction: if a subsidiary will not be eligible to file annual reports on Form 20-F after the effective date of the registration statement, it must disclose the information specified in Forms S-1 (§239.11).

Accordingly, the Form F-1 instruction does not establish that filing on that form removes an entire category of Securities Act disclosure. It identifies the rules and forms under which the applicable requirements are found.

Timing of the Status and Form Determinations

Under the ordinary Rule 405 definition, foreign private issuer status is determined as of the last business day of the issuer’s most recently completed second fiscal quarter.

For a new registrant with the SEC, the determination is instead made as of a date within 30 days before the issuer files its initial registration statement. The new-registrant determination is therefore tied to a date within that statutory window, not to a fixed calendar date for all issuers.

The form and content requirement is addressed separately by §230.401, “Requirements as to proper form.” Rule 401 provides that the form and contents of a registration statement and prospectus must conform to the applicable rules and forms in effect on the initial filing date.

The two determinations must therefore be kept distinct: Rule 405 establishes whether the issuer is a foreign private issuer for the relevant determination date, while Rule 401 fixes the registration statement and prospectus to the applicable rules and forms in effect on the initial filing date.

Majority-Owned Subsidiary Exception

Form F-1 contains a specific eligibility provision for a majority-owned subsidiary that does not itself meet the conditions.

The subsidiary is nevertheless deemed to have met those eligibility conditions if its parent meets the conditions and fully guarantees the securities being registered as to principal and interest.

Majority ownership alone is therefore insufficient. The parent must meet the stated conditions, and the parent must provide the required full guarantee as to principal and interest. When both requirements are satisfied, the subsidiary may be deemed eligible despite not independently meeting the eligibility conditions.

The resulting form analysis is straightforward: establish foreign private issuer status under Rule 405, apply the ownership and US-contact boundaries, confirm that Form F-1 is authorized because no other form applies, exclude any covered asset-backed securities offering, and then apply Rule 401 to the rules and forms in effect on the initial filing date.