HIGHLIGHTS:

  • Foreign private issuers listed on the New York Stock Exchange (NYSE) will need to furnish semiannual unaudited financial statements on Form 6-K.
  • Although the rule became operative on Feb. 5, 2016, the earliest deadline for submission of semiannual unaudited financial statements on Form 6-K will be June 30, 2016, for foreign private issuers whose second quarter ended Dec. 31, 2015.
  • NYSE listed foreign private issuers will need to furnish financial information with the U.S. Securities and Exchange Commission (SEC) at least twice per year: (a) audited annual financial statements on Form 20-F and (b) unaudited semiannual financial statements covering the first two fiscal quarters. The rule makes mandatory what was a commonly accepted, voluntary practice among foreign private issuers.

Current Law

The New York Stock Exchange (NYSE) recently proposed to amend the NYSE Listed Company Manual to require foreign private issuers1 listed on the NYSE to furnish2 with the U.S. Securities and Exchange Commission (SEC) semiannual unaudited financial information on Form 6-K.

Unlike their U.S. counterparts, foreign private issuers listed on the NYSE previously were not required to furnish interim financial information.

The new listing requirement would not alter the existing exemption3 for foreign private issuers from the Exchange Act registration and periodic reporting obligations applicable to U.S. domestic listed issuers. Note, however, that foreign private issuers remain obliged to furnish annual reports on Form 20-F, including audited4 annual financial statements.

NYSE Listing Requirement

The NYSE listing requirements now require a NYSE listed foreign private issuer, at a minimum, to furnish with the SEC semiannually a Form 6-K, including:

  1. an interim balance sheet as of the end of its second fiscal quarter
  2. a semiannual income statement that covers its first two fiscal quarters.

This unaudited financial information must be submitted on Form 6-K no later than six months after the end of the issuer's second fiscal quarter and presented in English, but the unaudited financial information need not be reconciled to U.S. Generally Accepted Accounting Principles (GAAP).

The NYSE proposed the new rule because it believes that annual financial disclosure is simply too infrequent to enable investors to make informed investment decisions. In addition, the NYSE said that it did not believe the rule change would affect most foreign private issuers significantly since many already provide this information.5

Penalty for Failure to Furnish

A NYSE listed foreign private issuer who fails furnish unaudited financial information semiannually on Form 6-K within the time required would have an initial six-month compliance period in which to furnish the unaudited financial information. SEC staff would have discretion to extend the period another six months. Any foreign private issuer that failed to comply within the cure period would risk delisting.

Immediately Operative

Because the NASDAQ already has a similar rule and because many NYSE listed foreign private issuers already voluntarily furnish semiannual unaudited financial information, the SEC took the atypical position to make the proposed NYSE rule immediately operative, although the SEC accepted comments on the rule until March 17, 2016.