Can Non-U.S. Citizens Buy Stocks of U.S. Companies?

As a U.S. citizen, most stock trading activity is regulated by the Securities and Exchange Commission (SEC) according to the Investment Company Act of 1940 and is protected by strict rules regarding:

  •  trade volume limitations
  •  public offering procedures
  •  further reporting and disclosure requirements for security holders

The term “U.S. company” is used to refer to a corporation that has been incorporated in the United States, regardless of where it does business. While this may be confusing because the Securities and Exchange Commission (SEC) regulates securities trading activity by U.S. citizens, as described above, non-U.S. citizens are able to invest in U.S.-based companies.

A non-U.S. company, such as a European Union (EU) corporation, can invest in stocks in USA inU.S.-based companies and purchase common stocks according to the rules of each EU country’s regulatory body that oversees trade between different countries within the EU. For example, an investor may invest directly in a U.S.-based stock automatically traded through Germany’s Xetra Stock Exchange and invest indirectly by purchasing shares automatically traded through the London Stock Exchange or NASDAQ OMX Helsinki Ltd.

Non-U.S individuals can invest directly or indirectly through any exchange trading market for securities located outside of the United States like those listed above as long as they are not prohibited from doing so by their national regulatory bodies such as the U.S. Securities and Exchange Commission, European Union Market Abuse Directive (MAD) or the United Kingdom Financial Conduct Authority (FCA).

 

Are there any restrictions?

There are no laws that restrict non-U.S citizens from buying stocks of U.S.-based companies at this time unless their national regulatory body prohibits them from investing in foreign markets like the United States. 

However, certain stock exchanges may prevent another company within its own country to invest in a specific business sector or industry segment located outside of their country’s borders which rules out certain exchanges for some investments located outside of their borders so it is advisable to research both the company being invested in as well as the exchange trading market for that investment prior to purchase.

To invest in a U.S.-based stock, non-U.S. citizens should research the local rules and regulations of their national regulatory body for information about how to invest within their country’s borders as well as what types of businesses or industries are prohibited from investment or who is prohibited from investing in those companies. 

In addition, it is recommended that prior to investing directly or indirectly through an exchange trading market outside of its borders, those interested inquire directly with the exchange trading market itself for more detailed information concerning any restrictions by calling them on the phone or writing them a letter to receive a response back promptly because most websites do not have this type of detailed information available online.

Since there are no laws restricting non-U.S. citizens from investing in U.S.-based company stocks, any non-U.S. citizen can invest in a U.S.-based company outside of their own country’s borders provided that they are not prohibited by their national regulatory bodies or that exchange trading market because both the SEC and European Union MAD are only concerned with what happens within their countries’ borders.

However, there are some exceptions to this rule since certain exchanges prohibit certain companies located outside of their own country’s borders from being traded on their exchange which rules out certain investments for possible trade on those exchanges so it is advisable to research both the company being invested in as well as the exchange trading market for that investment prior to purchase.

 

Is this information available online?

Not all exchanges invest in U.S.-based companies so it is advisable to research both the company being invested in as well as the exchange trading market for that investment prior to purchase.

 

What if your country doesn’t allow you to invest?

Some countries like China and India do not allow their citizens to invest outside of their own local economy which prevents them from investing in an American Company because it goes against their trade rules. 

The only way they can invest in a U.S.-based stock or company is through indirect trades on European or North American-based exchanges outside of their country’s borders like Germany, the United Kingdom, or North America like NASDAQ OMX Helsinki Ltd.. This prevents them from investing directly into individual stocks since they do not allow their citizens to invest in foreign markets like the United States.

Since there are no laws restricting non-U.S. citizens from investing in U.S.-based company stocks, those that fit into this category should research the local rules and regulations of their national regulatory body for information about how to invest within their country’s borders as well as what types of businesses or industries are prohibited from investment or who is prohibited from investing in those companies as well as trying to invest indirectly through an exchange trading market outside of its borders through a European Union MAD member state or North American based exchange like NASDAQ OMX Helsinki Ltd.

 

Conclusion

Non-U.S citizens can invest in stocks of U.S companies, but it is important to research both the company being invested in as well as the exchange trading market for that investment prior to purchase.

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