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Key Takeaways
- Effective March 18, 2026, directors and officers of foreign private issuers (FPIs) will have ongoing Section 16(a) reporting obligations.
- FPIs will not be subject to the short-swing profit rules pursuant to Section 16(b) or the short-sale prohibition pursuant to Section 16(c).
- The Securities and Exchange Commission (SEC) will have discretion to potentially exempt persons, securities or transactions from the Section 16(a) requirements if the SEC determines that the foreign jurisdiction applies "substantially similar requirements."
Background
On Dec. 18, 2025, President Donald Trump signed the Holding Foreign Insiders Accountable Act (HFIAA) into law, which among other things, ended the long-standing exemption of directors and officers of FPIs from ongoing Section 16(a) reporting obligations. While the exemptions remain intact with respect to Section 16(b) and Section 16(c), beginning on March 18, 2026, FPIs will now have to publicly report the holdings and transactions in any issuers' equity securities (and any derivatives) as reportable on Forms 3, 4 and 5. Notably, the HFIAA does not subject owners of more than 10 percent of securities to the same reportinga requirements.
The HFIAA comes as part of the National Defense Authorization Act for fiscal year 2026, which signals a renewed focus on enhancing oversight of foreign issuers accessing U.S. markets, particularly where differences in home-country rules may limit the effectiveness of U.S. oversight. For example, in June 2025, the SEC published a concept release to solicit comments on the definition of FPIs; the SEC noted that the FPI population has changed and evolved significantly since the last time that the SEC reviewed the definition of FPI. Such efforts reflect an ongoing effort to reduce regulatory asymmetries between foreign and domestic issuers, expand supervisory reach and bolster investor protections for domestic participants.
In Practice
Covered Issuers and Insiders
Directors and officers (as those terms are defined in the Securities Exchange Act of 1934, as amended (Exchange Act)) of FPIs that have securities registered pursuant to Section 12(b) or 12(g) of the Exchange Act will be subject to ongoing Section 16(a) reporting obligations. As discussed in further detail below, the SEC will have the authority to exempt insiders or any of their transactions from Section 16(a) if the SEC determines that the issuer is subject to "substantially similar requirements" within its home country; however, FPIs and covered insiders should not rely on this possible relief in the first instance. As of this date, the SEC has not identified any foreign jurisdictions that would be subject to this relief, although the EU, Canada and the United Kingdom are seen as potential contenders.
As noted above, while Section 16(a) covers directors, officers and 10 percent holders for domestic companies, 10 percent holders are not captured with respect to FPIs.
The term "director" (as defined in the Exchange Act) means "any director of a corporation or any person performing similar functions with respect to any organization, whether incorporated or unincorporated." The term "officer" (as defined in the Exchange Act) includes an issuer's president, vice president, secretary, treasurer or principal financial officer, comptroller or principal accounting officer, as well as any person routinely performing corresponding functions.
Initial Form 3 and Subsequent Reports
For domestic companies, an initial report on Form 3 is due within 10 calendar days of becoming an "insider" disclosing their beneficial holdings as of the date of becoming an insider. Now FPI insiders will also be subject to this same requirement, with an initial report on Form 3 being due on March 18, 2026. In addition, insiders will need to begin reporting any changes in their ownership on Form 4, as applicable, which must be filed within two business days of the transaction triggering the change in ownership. Form 5 captures all other transactions not captured by Form 4 or previously reported on Form 4, which must be filed on or before the 45th day after the end of the issuer's applicable fiscal year. For example, Forms 5 for issuers with a December 31 fiscal year-end will typically be due on Feb. 14.
Possible SEC Relief
As previewed above, the SEC will have discretion to potentially exempt persons, securities or transactions from the Section 16(a) requirements if the SEC determines that the foreign jurisdiction applies "substantially similar requirements." Since the discretion is permissive and does not mandate relief even for those jurisdictions imposing "substantially similar requirements," FPIs should not rely on the possibility of an exemption before taking next steps to ensure that they can comply with the first filing on March 18, 2026. As of this date, there are no exemptions.
Next Steps
- Director and Executive Officer Designations. As a matter of good housekeeping, FPIs should confirm which individuals will be captured by the Section 16(a) obligations. Once confirmed, since the process can take several weeks, FPIs should begin working with individuals to enroll in the SEC's EDGAR Next system. While the insiders are responsible for maintaining their codes and credentials, issuers will often handle an insider's codes on their behalf. If the insider serves on multiple boards, the insider and applicable companies need to coordinate.
- Collect Ownership Information. Since this will likely be the first filing disclosing an insider's ownership of the issuer's securities, the company will need to ensure that it has accurate ownership information for each director and officer. While the obligation to file the report rests with the individual, issuers often take ownership of preparing and tracking such filings.
- Insider Trading Policies. To the extent that an FPI does not have mechanisms in place to track an insider's transactions, FPIs should consider revising their insider trading policies and any internal policies to track such transactions moving forward. For example, preclearance procedures act as a safeguard to ensure that the issuer is aware of any insider transactions. In connection with such changes, issuers should consider whether further education and training are needed to educate directors and officers on their Section 16(a) obligations.
- Coordinate Filing Infrastructure. There are various ways that an issuer may choose to coordinate filing a Section 16 report. For example, many issuers rely on a financial printer to prepare Section 16 reports. Accordingly, FPIs should coordinate to ensure that they have the appropriate infrastructure in place to handle such filings for the Form 3 and on an ongoing basis.
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