Key takeaways:
- Effective March 18, 2026, directors and officers of foreign private issuers (FPIs) become subject to the reporting obligations of Section 16(a) of the Securities Exchange Act of 1934.
- Beneficial owners of more than 10% of the FPI’s stock remain exempt from Sec. 16(a) reporting.
- The SEC has authority to exempt FPI insiders from Sec. 16(a) reporting if the foreign law imposes substantially similar obligations.
On December 18, 2025, S. 1071, the National Defense Authorization Act for Fiscal Year 2026 (NDAA), was signed into law. Within the NDAA is the Holding Foreign Insiders Accountable Act (HFIAA). The HFIAA amends Section 16(a) of the Securities Exchange Act of 1934 so that the reporting obligations of Sec. 16(a) will now apply to the directors and officers of foreign private issuers (FPIs). The amendments to Sec. 16(a) go into effect on March 18, 2026.
What foreign private issuers need to know
Below is a summary of what FPIs and their legal advisers need to know about the extension of Sec.16(a) to FPI directors and officers:
- Sec. 16(a) requires certain insiders to report purchases, sales, and holdings of their company’s securities by filing Forms 3, 4, and 5 with the SEC. Prior to the enactment of the HFIAA, Sec. 16(a) only applied to the insiders of domestic public companies; the insiders of FPIs were not required to make the Sec. 16(a) filings.
- Sec. 16(a), as amended by the HFIAA, extends the Sec. 16(a) reporting obligations to every person who is a director or officer of a foreign private issuer.
- In the case of domestic public companies, the owners of more than 10% of the company’s stock also are required to make the 16(a) filings. However, the beneficial owners of more than 10% of an FPI’s stock are not required to file Forms 3, 4, and 5.
- Sec. 16(a) reporting consists of the following:
- Form 3: Filed by an insider subject to Sec. 16(a) reporting to initially disclose their ownership in their company’s securities. Form 3 is filed within 10 days after the person becomes an insider subject to Sec. 16(a) reporting or, in the case of an IPO, when the IPO becomes effective.
- Form 4: Filed to report changes in their ownership of the company’s stock that they reported on Form 3. Form 4 must be filed within 2 business days following the transaction that resulted in the change.
- Form 5: Filed when at least one transaction was not reported during the year due to an exemption or failure to report previously. Form 5 is due no later than 45 days after the company’s fiscal year ends.
- Forms 3, 4, and 5 must filed electronically through the SEC’s EDGAR system and must be in English.
- The SEC has authority to exempt any person, security or transaction, or any class or classes of persons, securities, or transactions, from having to make the filings of Sec. 16(a) if the SEC determines that the laws of the foreign jurisdiction apply substantially similar requirements to that person, security, or transaction.
- The HFIAA does not amend Sec. 16(b) (requiring disgorgement of short swing profits) or Sec. 16(c) (prohibiting short sales of the company’s stock). Therefore, insiders of FPIs (directors, officers, and over 10% beneficial owners) are not subject to those subsections.
- A failure to make a timely filing is a violation of the securities law, and the SEC has the authority to impose fines and other penalties.
- The amendments to Sec. 16(a) are effective March 18, 2026.
Next steps
FPIs should begin preparing for the effective date of March 18, 2026, including by determining which directors and officers will be required to file the Sec. 16(a) reports, obtaining proper EDGAR credentials, and in general preparing to assist their directors and officers with the filing of the required reports.
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