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• if 50% or less of its outstanding voting securities are held of record directly or indirectly by US residents; orÌý
• if more than 50% of its outstanding voting securities are held by US residents, and it has none of the following contacts with the United States: (1) a majority of its executive officers or directors are US citizens or residents; (2) more than 50% of its assets are located in the United States; or (3) its business is administered principally in the United States.

In the concept release, the SEC shared its findings from a recent review of the population of FPIs, citing changes between 2003 (the first year of electronic filing) and 2023 they considered significant. Those changes included:

• A substantial shift in the jurisdictional composition of FPIs â€� In 2003, the most common jurisdictions both in terms of incorporation and headquarters were Canada and the United Kingdom. In 2023, the most common jurisdiction of incorporation was the Cayman Islands and the most common jurisdiction of headquarters was China. The SEC noted that FPIs with differing jurisdictions of incorporation and of headquarters shifted from 7% in 2003 to 48% in 2023.
• A shift in the global trading of equity securities becoming more concentrated in the US capital markets â€� Approximately 55% of the FPI population had little to no trading of securities on any non-US market and appear to maintain listings of their equity securities only on US national securities exchanges.

The concept release includes general and specific questions seeking foundational input on:

1. whether the accommodations afforded to FPIs should continue to apply to the companies captured by the current definition, and
2. if not, how should the definition be changed in light of the changes in the population.

The possible areas of amendments include the following:

• updating the existing FPI eligibility criteria (e.g. modifying the tests described in the current definition to lower percentages of US resident ownership);
• adding a foreign trading volume requirementÌý(e.g. establishing minimum volumes to ensure foreign presence and an annual test);
• adding a “major foreign exchangeâ€� listing requirement (e.g. establish definitions and criteria for a “major foreign exchangeâ€� and require listing);
• incorporating an SEC assessment of foreign regulation applicable to the FPI (e.g. require incorporation or headquarters in a jurisdiction with a robust regulatory framework, similar to criteria established for “major foreign exchangeâ€�);
• establishing new mutual recognition systems (e.g. similar to mutual recognition approach for Canadian issuers under the Multijurisdictional system “MJDSâ€�); and
• adding an international cooperation arrangement requirement (e.g. FPI certifies it is incorporated in a jurisdiction where it is subject to the oversight of a foreign securities authority that has signed the “IOSCO Multilateral Memorandum of Understanding Concerning Consultation, Cooperation, and the Exchange of Informationâ€�).