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Chapter 13. The Public Offering Process > Foreign Companies Raising Capital

Foreign Companies Raising Capital

Foreign companies raising capital in the United States enjoy several types of relief in comparison to U.S. companies, which are intended to encourage foreign companies to go public in the United States rather than on another international market. A foreign company is defined as a company registered outside the United States, provided that fewer than 50% of its shareholders are U.S. residents (the test is one of beneficial ownership and the company is required to conduct a reasonable investigation into the place of residence of its shareholders), and further provided that a majority of the company's activities and assets are managed outside the United States. Following are the main forms of relief enjoyed by foreign companies.

Disclosure under International Disclosure Rules

Foreign companies file their registration statements in an IPO on Form F-1, the disclosure requirements of which are less strict than those required of U.S. companies filing a Form S-1. The main differences concern the disclosure of managers' salaries, information about the identity of customers, and the level of specification of the company's results in various segments of operations. The disclosure rules which apply to foreign companies in the United States are fixed in Form 20-F.


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