Irish-backed firm Vertical Aerospace among companies voicing concerns over requirements
Vertical Aerospace has said it may have to reconsider its current and sole listing on the New York Stock Exchange if it was forced to seek an additional stock market listing outside the US.
The SEC is considering a revamp of the rules that govern so-called foreign private issuers (FPIs).
The changes could make it more difficult for non-American firms to qualify for the status. The SEC is also contemplating forcing FPIs to also maintain a non-US listing on a major stock exchange.
An FPI lists its shares in the US and is granted significant benefits in terms of reporting requirements. Unlike domestic US firms, they do not have to file quarterly reports, for example, but some do regardless.
Such a move “would impose costly compliance burdens”
Among the proposals also being considered by the SEC is that FPIs would have to adopt US GAAP (Generally Accepted Accounting Principles).
In a joint submission, Diageo, Budweiser owner Inbev, UBS, Norwegian energy giant Equinor, German software firm SAP and the UK’s National Grid, have argued that such a move “would impose costly compliance burdens that are unnecessary for protection of US investors”.
“Any such new requirements would disincentivise large multinational companies headquartered and listed outside the US from accessing the US capital markets and ultimately impede US investors’ access to global investment opportunities,” they said.
FPIs can also typically follow home-country governance rules rather than having to comply with American ones.
Foreign companies typically secure a US listing in order to access deep pools of capital and investors there.
Irish companies including Paddy Power owner Flutter Entertainment and CRH have moved their primary listings to the United States, benefiting from a much bigger investor base as their businesses continue to generate significant revenue in America.
New investors might not be as clued into its business as “sophisticated” Americans
Last week, the world’s biggest jet leasing firm, Dublin-based AerCap, warned that if it was forced it to seek another share listing under any SEC rule changes, the Dublin-based company would have to attract new investors who might not be as clued into its business as “sophisticated” Americans.
AerCap listed on the New York Stock Exchange in 2006.
Vertical Aerospace, whose chairman is Dómhnal Slattery, the former CEO of jet lessor Avolon, has told the SEC that it should retain current rules. Avolon is among the investors in Vertical.
The firm has developed a prototype electric air taxi vehicle – VX4 – that is moving into its final test phases.
“As an international, pre-revenue company, Vertical relies on the existing FPI framework to access US capital markets while also being subject to rigorous governance, accounting, and disclosure standards under the US securities laws, UK laws, Cayman Island laws and international financial reporting standards,” it told the SEC.
It added that having to adopt GAAP reporting would mean having to retrain finance teams, add additional resources and potentially overhaul its IT systems.
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