The Foreign Corrupt Practices Act does not just apply to U.S. companies.
Rather, foreign companies that are listed on a U.S. stock exchange or otherwise required to file periodic reports with the SEC are “issuers” and thus subject to the FCPA’s books and records and internal controls provisions as well as the anti-bribery provisions under the dd-1 prong of the statute to the extent the “mails or any means or instrumentality of interstate commerce” are used in furtherance of a bribery scheme.
In addition, any foreign company or national can be subject to the FCPA’s anti-bribery provisions under the dd-3 prong of the statute which requires that “while in the territory of the United States” corrupt use of the mails or any means or instrumentality of interstate commerce or any other act in furtherance of a bribery scheme.
Against this backdrop, one might wonder how many foreign companies are issuers under the FCPA?
Each year, the SEC’s Division of Corporation Finance releases a chart titled “Number of Foreign Companies Registered and Reporting with the U.S. Securities and Exchange Commission.” Set forth below are the total number of foreign issuers for each of the past five years.
Total Number of Foreign Issuers
2014 – 912
2013 – 940
2012 – 946
2011 – 965
2010 – 970
As the above figures highlight, each year for the past five years there have fewer foreign issuers in the U.S.
I am not suggesting a direct casual relationship between this fact and the new era of FCPA enforcement (declared in 2010 and during which several foreign issuers have resolved FCPA enforcement actions). Indeed, a company determining where to list its securities will consider numerous factors not just whether a listing will expose the company to a certain law.
Nevertheless, it is interesting to note (as highlighted in this prior post) that certain foreign companies such as Siemens, Daimler and Magyar Telekom deslisted their U.S. securities after resolving FCPA enforcement actions.
Foreign Issuers Based on Country of Incorporation
The SEC’s data also lists foreign issuers based on the country of incorporation and for each of the past five years Canada, the Cayman Islands, and Israel have been 1, 2 and 3 in terms of the country of incorporation of foreign issuers.
The percentage of foreign issuers from Canada has ranged between 30-35% over the past five years.
The percentage of foreign issuers from the Cayman Islands has ranged between 13-14% over the past five years.
The percentage of foreign issuers from Israel has ranged between between 7-9% over the past five years.
What is interesting about these figures is that despite accounting for between 30-35% of foreign issuers in any given year, there has never been an FCPA enforcement action against an issuer from Canada. That may change in the near future as the following Canadian issuers have all disclosed FCPA scrutiny: Kinross Gold Corp, Nordion, and Brookfield Asset Management.
In terms of the Cayman Islands, the following issuers incorporated there all resolved FCPA enforcement actions in connection with the 2010 CustomsGate enforcement action concerning alleged conduct in Nigeria: Transocean, Noble Corp. and GlobalSantaFe.
In terms of Israel, there has never been an FCPA enforcement action against an issuer from Israel, but this too may change in the near future as Teva Pharmaceuticals has disclosed FCPA scrutiny.