From the perspective of FCPA compliance, foreign entities that are issuers can be fully subject to the same obligations of the FCPA's anti-bribery and accounting and record-keeping provisions as a U.S. entity that is an issuer.   An issuer is an entity that is required under the Securities Exchange Act to register under Section 12 or to file reports under Section 15(d).[1]  In general, publicly-held entities traded on a national exchange in the United States are issuers.  This can include the National Association of Securities Dealers Automated Quotation System (NASDAQ).

Issuers can include foreign entities,[2] including a foreign entity with American Depository Receipts (ADRs), which are registered pursuant to Section 12 or required to file reports pursuant to Section 15(d).  ADRs represent an ownership interest in the securities of a foreign private issuer, which are deposited, usually outside of the United States, with a financial institution as a depository. ADRs can be, and are, listed on a national securities exchange.

One of the most overlooked areas of compliance relates to foreign issuers and particularly foreign entities with ADRs listed in the United States.   The oversight in terms of compliance is not limited to the anti-bribery provisions.  It also extends to the accounting and record-keeping provisions.  In numerous cases, the status of foreign entities as issuers under the FCPA has been the basis for the Justice Department or SEC to take enforcement action.

 

[1]15 U.S.C. §§ 781, 780(d)(2012).

[2]In some circumstances, an exemption from this registration requirement may be available to a foreign private issuer, 15 U.S.C. § 78(g)(3) (2012); 17 C.F.R. § 240.12g3-2(b) (2012). On October 10, 2008, the SEC amended 17 C.F.R. § 12g3-2(b) to exempt foreign private issuers whose securities are listed on markets in their home countries and not listed on a national securities exchange in the United States if they publish certain financial and business information in English on their web sites. SEC Release No. 34-58465.