For foreign private issuers (FPIs), the U.S. remains the deepest and most liquid public market in the world, but a successful listing requires more than access to capital. Underwriters and institutional investors closely scrutinize governance, financial reporting, and public-company readiness when evaluating prospective FPIs. Companies that begin addressing those areas well before filing are better positioned to identify and remediate issues before the transaction timeline accelerates and to meet the ongoing demands of operating as a U.S.-listed public company.

Why the U.S. Matters for FPIs

Depth of Market

U.S. public markets combine significant institutional capital with a deep base of sector-focused investors and analysts. For FPIs whose home markets offer more limited liquidity, institutional participation, or research coverage, a Nasdaq or New York Stock Exchange (NYSE) listing can broaden the potential investor base and increase visibility among investors and analysts with relevant sector expertise.

Life After IPO

A U.S. listing is rarely the endpoint. It can provide a platform for subsequent capital raising and strategic transactions, including follow-on offerings, convertible securities, and the use of publicly traded equity as consideration in cross-border M&A.

For issuers competing with U.S.-domiciled peers for acquisitions, publicly traded U.S. equity can also provide an additional form of transaction consideration. An established trading history, sufficient liquidity, and a meaningful institutional shareholder base can make that equity more attractive to potential acquisition targets.

FPI Accommodations

Foreign private issuers benefit from several accommodations under the U.S. reporting and governance framework. Unlike U.S. domestic issuers, FPIs are generally not subject to the same quarterly reporting requirements and may report financial results on a less frequent basis. They may also prepare financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) without providing a reconciliation to U.S. Generally Accepted Accounting Principles (U.S. GAAP). FPIs may also follow home-country practices in lieu of certain U.S. exchange corporate governance requirements.

Three Questions Prospective FPIs Should Be Asking

Every readiness checklist covers the mechanics of the IPO, including selecting underwriters, preparing the Form F-1 registration statement, and conducting the roadshow. However, fewer focus on the candid internal discussion that determines whether the organization is ready to operate as a public company.

Are Our Financial Statements Ready for U.S. Public-Market Scrutiny?

Even when an FPI can continue using its existing accounting framework, preparing financial statements for a U.S. offering can surface accounting judgments, disclosure requirements, and reporting-process gaps that were less significant under the company's prior reporting environment.

Reporting infrastructure built for a private or locally listed company may not be designed to meet financial reporting, disclosure, internal controls, and audit committee expectations that come with a U.S. public listing. For many FPIs, the IPO process subjects the control environment to a level of scrutiny that it may not have previously experienced. Deficiencies that might otherwise have been identified and remediated over time can instead emerge during the transaction process, when deadlines are fixed and remediation time is limited.

An analysis of domestic and foreign issuer IPO filings on NYSE and Nasdaq from 2019 through 2024 found that 79% of FPIs disclosed at least one material weakness in internal control over financial reporting, compared with 37% of domestic issuers.^[1] The disparity illustrates the financial reporting and control issues that can emerge as FPIs prepare to meet U.S. public-company requirements.

Beyond accounting and internal controls, FPIs also need to assess whether the broader finance function is prepared to operate as a U.S. public company. This includes the ability to close the books on a timeline that supports public-company reporting requirements and consistently produce reliable financial data within applicable reporting deadlines. Processes, systems, and staffing may need to be strengthened to meet the reporting requirements and increased scrutiny that come with operating as a U.S.-listed public company.

FP&A is another important area of readiness. Public companies need disciplined budgeting and forecasting processes that allow management to develop reliable financial forecasts, analyze variances, and update expectations as business conditions change. For FPIs whose forecasting processes were primarily designed for internal planning, preparing for a U.S. listing may require greater rigor around data quality, assumptions, accountability, and management review.

Can Our Internal Controls Support Life as a Public Company?

Financial statement readiness is necessary but not sufficient. A related question is whether the control environment that produced those statements can hold up under the operating cadence of a public company, not just the one-time exercise of preparing an offering document.

Smaller issuers may face challenges in building public-company-ready controls because they often have fewer resources to devote to SOX compliance, control documentation, testing, and remediation. Better-resourced issuers may have greater capacity to establish dedicated compliance resources, engage external advisers, and conduct staged testing well ahead of filing. For smaller issuers, identifying control gaps early is especially important because remediation can require significant time and management attention. Control deficiencies can also raise broader questions about management’s readiness to operate as a public company. Investors and underwriters may consider whether weaknesses in the accounting and control environment indicate that management will need to devote additional resources and attention to meeting ongoing public-company requirements. Depending on their nature and severity, those deficiencies can become an important consideration during diligence and the offering process.

Can the Organization Operate Effectively as a U.S.-Listed Company?

A company can pass its control testing and still be unprepared for the ongoing demands of operating as a U.S. public company.

Although FPIs may rely on home-country practices for certain U.S. exchange governance requirements, they remain subject to specific U.S. requirements, including requirements applicable to audit committees. A U.S. listing may also create new expectations around board composition, independence, and governance. Assessing board composition and recruiting qualified directors should begin early, particularly because prospective directors typically conduct their own diligence before agreeing to serve.

A U.S. listing creates responsibilities that extend well beyond the finance function. Legal, finance, investor relations, and other functions need clearly defined roles for SEC reporting, earnings releases, investor communications, exchange compliance, and other recurring public-company obligations. Companies should assess whether they have the internal resources, processes, and external support needed to meet those responsibilities before going public so that the necessary infrastructure is in place before the listing.

Effective disclosure requires more than establishing a committee and scheduling recurring meetings. The organization needs a process for identifying potentially material information, escalating it to the appropriate decision-makers, and reaching disclosure decisions under time pressure. Legal, finance, investor relations, and business leaders may bring different perspectives to those decisions.

Dry runs and mock disclosure exercises before the IPO can help test those processes. Working through scenarios such as a guidance miss, an unexpected customer development, or a related-party transaction gives management an opportunity to identify gaps in information flows, responsibilities, and escalation procedures before the organization has to make those decisions as a public company.

What This Means for Prospective FPIs

For foreign private issuers, the benefits of accessing the U.S. public markets come with additional financial reporting, internal control, governance, and organizational demands.

Readiness work should begin as early as practical. Funding constraints, transaction timing, and market conditions may limit the amount of time available before an IPO process begins. A compressed timeline does not change what is required to operate effectively as a public company, but it can change how the readiness effort is executed. Companies may need to run workstreams in parallel, supplement internal resources with external support, and address identified gaps on an accelerated timeline.

Regardless of the time available, the objective is the same: to enter the public markets with the financial reporting, controls, governance, and organizational infrastructure needed to operate effectively as a U.S.-listed company.

1. “Considering an IPO? Disclosing your (material) weakness may be your greatest strength,” Insights, webpage, PwC.