Kristina Roberts
The United States Securities and Exchange Commission, often called the SEC, is planning to take early steps to review and possibly change the rules for foreign companies that are traded on U.S. stock markets. A public meeting is scheduled in Washington, D.C., and officials are expected to talk about whether new rules should be created. These rules would focus on which foreign companies should be allowed to follow easier reporting requirements compared to U.S.-based companies. At this stage, the SEC is simply thinking about asking the public for comments and ideas. The exact details of what the new rules might say have not been shared yet.
This conversation about changing the rules began last year. A Republican commissioner named Mark Uyeda spoke at Harvard University and shared his concern that foreign companies, especially some from China, enjoy looser regulations even though they are only traded in the United States and not in their home countries. Uyeda questioned whether this special treatment was fair, especially since American companies trading on the same stock exchanges must follow stricter U.S. laws. These rules require U.S. companies to file financial reports every three months, share major company news quickly, and follow other detailed procedures. Meanwhile, many foreign companies only need to file a yearly report and a few occasional updates.
Uyeda explained that these foreign companies are considered “foreign private issuers.” This label allows them to skip some of the usual rules, which can make things easier for them. For example, they do not need to follow U.S. proxy rules, which are related to how shareholders vote on company matters. They also are not required to report quarterly earnings or quickly notify the public about big changes, like if a board member leaves or if the company merges with another. Uyeda said, “This issue deserves attention, and the SEC should consider evaluating whether foreign private issuers should be limited to companies whose securities are also listed on a foreign stock exchange.”
According to a study ordered by Congress in 2024, nearly 90% of the 265 Chinese companies trading on U.S. stock exchanges were not also listed on stock exchanges in their own country. This number was highlighted by Uyeda to show how these companies operate mainly in the U.S. but still get treated as if they are based somewhere else. He argued that if a company is only listed in the U.S., then it should follow the same rules as American companies.
The goal of this new SEC discussion is to decide whether to officially begin a public comment process. This process would allow investors, experts, and the general public to share their opinions on whether the current definition of a foreign private issuer should change. So far, the SEC has not shared any proposed rule changes or written drafts. They are just opening up the conversation to gather ideas and opinions.
Some people worry that changing the rules too much could scare foreign companies away from the U.S. markets. Others believe that equal treatment is necessary to protect American investors and make sure everyone plays by the same rules. Uyeda believes that transparency and fairness should be at the center of the conversation. He pointed out that many American companies are required to share far more information, more often, than their foreign counterparts, even though both are listed on the same exchanges.
The question being asked is simple but very important: Should companies that do most of their business in the U.S. and are only listed on U.S. stock markets still be allowed to avoid some of the rules that American companies must follow? Uyeda’s suggestion is that perhaps they shouldn’t. He wants the SEC to think about whether a company should only be considered a foreign private issuer if it also lists its shares on a foreign stock exchange.
Uyeda has not made any final recommendations, and the other commissioners at the SEC have not announced any positions either. It is still very early in the process. No one knows yet whether the SEC will go forward with rule changes or how those changes might look. What is clear is that there is growing interest in making sure that all companies on U.S. stock markets follow rules that protect investors and provide clear, timely information.
The SEC has declined to comment further on the issue, and so has Commissioner Uyeda. But by holding a public meeting and possibly starting a comment process, the agency is showing that it is open to looking more closely at how foreign companies are treated. The goal is to ensure that the rules are fair, up-to-date, and suitable for today’s global economy.
This topic has also started conversations outside the SEC. Some business experts and investors have expressed concern that the current system might allow certain companies to hide information or avoid proper oversight. They believe this could lead to problems if a company fails or is involved in wrongdoing and investors were not properly informed. On the other hand, some global companies argue that the current system helps them save costs and avoid duplication since they already report in their home countries. However, when those companies are not listed in any other country, that argument becomes harder to support.
Right now, the U.S. is home to one of the largest and most powerful stock markets in the world. Many international companies want to be listed in the U.S. to gain access to American investors and markets. But if those companies do not have to follow the same rules as U.S. companies, it can create an unfair situation. Uyeda and others believe that treating all companies the same, or at least making the rules more equal, could help protect investors and keep the market strong.
As of now, everything is still in the early stages. No decisions have been made, and no new rules have been put in place. The SEC’s meeting is only the first step in what could be a long process of review, discussion, and possible changes. But even this first step shows that U.S. officials are paying attention to how foreign companies are treated in American financial markets. Whether or not new rules are written, this issue will likely remain a topic of debate for some time.
For now, all eyes are on the SEC to see what it will decide to do next. Investors, companies, and market watchers are waiting to find out if there will be changes that affect how foreign businesses operate in the United States. As Uyeda’s speech and the congressional study have shown, the question of fairness and transparency is not just about numbers—it’s about trust and balance in the financial world.
