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The Latham FPI Guide: Accessing the US Capital Markets from Outside the United States

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The Latham FPI Guide: Accessing the US Capital Markets from Outside the United States The Latham FPI Guide: Accessing the US Capital Markets From Outside the United States 2021 Edition 2 The Latham FPI Guide – 2021 Edition 2021 EDITION The Latham FPI Guide: Accessing the US Capital Markets From Outside the United States Fabry-Pérot Interferometer, SA is a highly successful non-US company known to the world as FPI. FPI is considering doing a debt or equity offering in the United States. What are the key legal issues it, and its underwriters or financial advisors, are likely to face? This book was written to help answer that question. Our aim is to help the FPIs of the world and their investment bankers understand better the regulatory regime applicable to capital-raising activities in the United States. US regulation of securities offerings is quite complex and may appear overwhelming to an issuer accessing the US capital markets for the first time. In order to make the maze of US regulations a bit more manageable, we have chosen in this book to focus only on those aspects of US law that, in our experience, are most relevant to US capital markets transactions involving non-US companies. Taking this approach means we have had to be selective – for example, we do not address the separate regimes that apply to offerings by certain Canadian-domiciled issuers, non-US governments, and registered investment companies. And we do not attempt to provide a detailed analysis of every legal issue or every regulatory regime (such as, for example, those that may apply to companies engaged in business in highly regulated areas like banking, communications, or utilities) that a non-US company may face. But we think our approach strikes the appropriate balance between a simple issues outline and a typical multi-volume treatise and, as such, hope you will find this book to be a useful – and more user-friendly – resource for those wishing to enter and navigate these waters. Before we delve further into our topic, just an additional word about format. We have included various “Practice Points” throughout the book to highlight certain key items we think are helpful to keep in mind as the proposed transaction takes shape and you begin to formulate your strategy. As a necessary evil, we have also included extensive endnotes, which include references to the primary source materials and are quite handy when trying to recall the basis for, or evolution of, a particular position. (Of course, the underlying statutes, rules, regulatory interpretations, and the like are subject to change and should always be consulted anew for each proposed transaction, and this book should not be relied on as providing definitive advice with respect to any particular transaction or situation.) Introduction 1 Chapter 1: Background ..................................................................................... 13 US Securities Act of 1933; US Securities Exchange Act of 1934 ...........................................13 JOBS Act ................................................................................................................................13 Foreign Private Issuers ..........................................................................................................13 What Is a “Foreign Private Issuer”? ...............................................................................13 How Is US Ownership of Record Determined? ..............................................................14 When Is Foreign Private Issuer Status Determined and What Are the Consequences of Gaining or Losing That Status? ........................................................14 What Are Some of the Benefits of Being a Foreign Private Issuer? ..............................15 Registered and Unregistered Offerings ..................................................................................17 Chapter 2: Unregistered Global Offerings – Regulation S, Rule 144A, and Traditional Private Placement Transactions ........................ 19 Regulation S – Background ...................................................................................................19 Regulation S Safe Harbor for Sales by an Issuer, Underwriter, or Affiliate ............................20 Category 1 .....................................................................................................................20 Category 2 .....................................................................................................................20 Category 3 .....................................................................................................................21 Consequences of Not Following the Regulation S Safe Harbor Conditions ..........................22 Rule 144A Transactions .........................................................................................................22 Rule 144A Requirements ...............................................................................................22 General Solicitation ........................................................................................................23 Definition of QIB .............................................................................................................23 A/B Exchange Offers .....................................................................................................23 Traditional Private Placements – Section 4(a)(2) ...................................................................24 Regulation D Private Placements ..........................................................................................24 Rule 506 Safe Harbor ....................................................................................................24 Deviations From Regulation D .......................................................................................26 Rule 506(c) Offerings .....................................................................................................26 “Bad Actor” Disqualification From Rule 506 Offerings ...................................................26 Restrictions on Communications in Connection With Unregistered Global Offerings ............28 Offshore Press Activity – Securities Act Rule 135e ........................................................28 Limited Notices of Unregistered Offerings – Securities Act Rule 135c ..........................29 Research Reports ..........................................................................................................29 Use of the Internet for Unregistered Global Offerings ............................................................30 Offshore Offering With No Concurrent US Offering .......................................................30 Offshore Offering With Concurrent US Unregistered Offering .......................................30 2 The Latham FPI Guide – 2021 Edition State Blue Sky Issues in Unregistered Global Offerings ........................................................30 FINRA Filing Requirements for Private Placements ..............................................................31 Chapter 3: Unregistered Resales of Regulation S and Privately Placed Securities ............................................................................... 35 Resales of Securities .............................................................................................................35 Regulation S Safe Harbor for Offshore Resales ....................................................................35 “Section 4(11/2)” Resales ........................................................................................................36 Rule 144 Resales ...................................................................................................................36 Chapter 4: SEC-Registered Offerings .............................................................. 39 Issues to Identify Before Registration ....................................................................................39 Available Registration Forms .................................................................................................41 ADRs and ADSs .....................................................................................................................42 NYSE and Nasdaq Listing Requirements ..............................................................................42 Confidentiality .........................................................................................................................43 FINRA’s Corporate Financing Rule and Related Requirements ............................................43 Chapter 5: SEC-Registered Offerings by EGCs Under the JOBS Act .......... 47 EGC Status ............................................................................................................................47 Elements of the IPO On-Ramp ..............................................................................................47 EGCs and the IPO Process ...................................................................................................48 “Testing the Waters” .......................................................................................................48 Scaled Financial Disclosures .........................................................................................48 Research ................................................................................................................................48 Chapter 6: Gun Jumping – Restrictions on Communications in Connection With Registered Securities Offerings ........................................
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