Section 16(a) Reporting Will Be Required for Foreign Private Issuer Directors and Officers

Starting on March 18, 2026, any executive officer or director of any “foreign private issuer”ⁱ (FPI) that has a class of equity securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the Exchange Act) will be required to disclose his or her pecuniary interest in equity securities and any transactions in the securities of the FPI in which the executive officer or director is an insider, in accordance with Section 16(a) of the Exchange Act.

Importantly, an officer or director of an FPI will still not be required to comply with Section 16(b)’s short-swing profit disgorgement rules nor Section 16(c)’s short sale prohibitions. Also, beneficial owners of greater than 10% of the outstanding shares of FPIs will generally not be subject to the reporting requirements of Section 16(a) or the other Section 16 rules.

The application of Section 16(a) to executive officers and directors of FPIs marks the first expansion of disclosure rules for FPIs since Paul Atkins, Chair of the Securities and Exchange Commission (SEC) announced in June 2025 that the SEC was considering changing the definition of “foreign private issuer” in the interest of “providing investors with material information about these foreign companies and ensuring that domestic companies are not competitively disadvantaged with respect to regulatory requirements.”

Highlights

• Directors and officers of FPIs will be subject to Section 16(a) reporting obligations from March 18, 2026.
• Required filings include Forms 3, 4 and 5 on the SEC’s EDGAR system, which requires enrollment on EDGAR Next.
• Beneficial owners of greater than 10% of the outstanding shares of FPIs are not subject to Section 16 requirements unless they are also “directors by deputization.”
• Directors and officers of FPIs are not subject to Section 16(b) short-swing profit liability or Section 16(c) short sale restrictions.
• The SEC has authority to exempt persons who are subject to “substantially similar requirements” in their home jurisdictions, though the timing and scope of such exemptions remain uncertain.

Background on Section 16 and Foreign Private Issuers

Section 16 of the Exchange Act requires the following of directors, officers and greater than 10% beneficial owners of domestic public companies:

• Section 16(a): public reporting of insider beneficial ownership and transactions;
• Section 16(b): disgorgement of profits from matching trades within a six-month period (short-swing profits); and
• Section 16(c): prohibition of most short sales by insiders.

Rule 3a12-3(b) under the Exchange Act previously exempted FPIs from all Section 16 provisions. The Holding Foreign Insiders Accountable Act (HFIAA), contained within the National Defense Authorization Act for Fiscal Year 2026 (NDAA 2026), removes the exemption for Section 16(a) for executive officers and directors of FPIs beginning 90 days after effectiveness. President Trump signed the NDAA 2026 and the HFIAA into law on December 18, 2025, meaning that Section 16(a) will apply to executive officers and directors of FPIs starting on March 18, 2026.

New Section 16(a) Reporting Requirements

Effective March 18, 2026, and pending any nuance introduced by the SEC’s final rule, adherence to Section 16(a) will require any director or executive officer of an FPI to make the following disclosures:

• Form 3 (Initial Statement of Beneficial Ownership): This form discloses initial pecuniary interest in the equity securities and certain derivatives thereof by directors and officers of securities of the issuer with respect to which they are an insider, including common stock, preferred stock, options, warrants, convertible securities, swaps and other derivatives. Directors and officers must file a Form 3 within 10 days of becoming a director or officer. For existing directors and officers as of March 18, 2026, a Form 3 must be filed by March 18, 2026. If an FPI goes public after March 18, 2026, the executive officers and directors of the FPI would be required to file a Form 3 on the date of the effectiveness of the registration statement.
• Form 4 (Statement of Changes in Beneficial Ownership): Directors and officers must file a Form 4 disclosing any change in pecuniary interest in equity securities before the end of the second business day following any transaction in the FPI’s equity securities, including purchases, sales, gifts, equity compensation grants and certain transactions in derivative securities.
• Form 5 (Annual Statement): Directors and executive officers may need to file a Form 5 within 45 days after the FPI’s fiscal year end to report certain transactions eligible for deferred reporting, such as small acquisitions or certain equity compensation grants.

Who Must Report

The definition of “officer” for Section 16(a) purposes includes an issuer’s president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice-president of the issuer in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the issuer. Officers of the issuer’s parent(s) or subsidiaries shall be deemed officers of the issuer if they perform such policy-making functions for the issuer. Individuals identified as executive officers for Form 20-F purposes are presumed to be officers under Section 16(a).

Directors subject to Section 16(a) include both individuals elected to the board and “directors by deputization,” i.e., an entity that designates an individual to serve as its representative on a company’s board.

Potential Jurisdiction-Specific Exemptions: A Moving Target

HFIAA permits the SEC to conditionally or unconditionally exempt persons, securities or transactions from Section 16(a) if a foreign jurisdiction applies “substantially similar requirements.” Directors and executive officers of FPIs listed in jurisdictions including Canada, the United Kingdom and Europe are already subject to comparable insider reporting requirements, but the SEC has not yet declared whether incorporation in those jurisdictions will result in an automatic exemption from Section 16(a) reporting requirements. Given this uncertainty, all FPIs, together with their executive officers and directors, should prepare to comply with Section 16(a) by the March 18, 2026 deadline, regardless of home country law.

Immediate Action Items

To prepare to comply with Section 16(a) by the March 18, 2026 deadline, FPIs should:

• Identify Covered Officers. FPIs must determine which individuals qualify as “officers” under SEC rules. Particular attention should be paid to the principal accounting officer or controller, who may not typically be considered an executive officer internally but will still be subject to reporting requirements.
• Obtain EDGAR Filing Codes. Directors and executive officers need SEC log-in codes to file on EDGAR, requiring notarized Form ID applications that can take several weeks. Individuals with prior EDGAR access should verify they can still access the upgraded EDGAR Next system.
• Map Beneficial Ownership. Companies should work with directors and executive officers to identify all direct and indirect holdings, including securities held through family members, trusts, partnerships or other entities. Determining beneficial ownership can be complex and time-consuming, particularly where holdings are indirect.
• Establish Reporting Infrastructure. While filing obligations rest with individual insiders, companies typically handle the procurement of EDGAR codes, form preparation and filing mechanics for directors and executive officers. Companies should determine whether to handle Section 16(a) reporting in-house or engage financial printers and external counsel.
• Update Policies and Procedures. FPIs should consider implementing preclearance procedures to allow adequate time for Form 4 preparation and filing within the two-business-day deadline.
• Provide Training. Directors and officers need education on reporting obligations, U.S. securities law concepts such as beneficial ownership and pecuniary interest, transaction types requiring reporting, filing deadlines and EDGAR procedures.

Companies should coordinate with U.S. securities counsel to ensure transactions and shareholdings are reported correctly.

Consequences of Non-Compliance

Late or missing Section 16 filings constitute violations of securities laws by the individual responsible for filing and can draw SEC scrutiny to the individual insider and the related FPI. The SEC has periodically focused on untimely filings, announcing enforcement actions against individuals and affiliated companies for failure to timely file Section 16 reports. While FPIs are not subject to the disclosure requirements of Item 405 of Regulation S-K regarding late filings, the SEC nonetheless has broad authority to seek “any equitable relief that may be appropriate or necessary for the benefit of investors” for violations of securities laws provisions.

Conclusion

FPIs, together with their executive officers and directors, should prepare to comply with Section 16(a) by March 18, 2026, and should remain attentive to the SEC’s final rules. Given the time necessary to identify covered officers and obtain EDGAR filing codes, adequate preparation may require companies to take action well in advance of that deadline.

i Currently, pursuant to Rule 3b-4 of the Securities Exchange Act of 1934, a foreign company will qualify as an FPI unless, on the last business day of its most recently completed second fiscal quarter:

     a. More than 50% of the issuer’s outstanding voting securities are directly or indirectly held of record by residents of the United States; and

     b. Any of the following:

          i. The majority of the executive officers or directors are United States citizens or residents;

          ii. More than 50% of the assets of the issuer are located in the United States; or

          iii. The business of the issuer is administered principally in the United States.