Under U.S. law, the SEC administers a nation-wide system of regulations which controls the manner in which funds can be raised through the U.S. capital markets. U.S. companies, as well as foreign companies, are subject to these controls. Qualification for access to the American securities markets can be extremely burdensome for foreign companies. SEC registration and disclosure requirements are often very expensive, particularly if the foreign company has not maintained accounting records according to U.S. accounting standards. However, the apparent trend toward easing restrictions on foreign companies should be welcome news to foreign issuers who are considering access to U.S. capital markets.
Current rules require five years of financial documentation.
U.S. stock exchange officials and regulators are hopeful that these new regulations will encourage more foreign companies to seek funding directly through U.S. markets.