March 26, 2026
Legal Alert
Effective March 18, 2026, directors and officers (“D&Os”) of foreign private issuers (“FPIs”) with a class of equity securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are generally subject to the reporting obligations of Section 16(a) of the Exchange Act. The Holding Foreign Insiders Accountable Act (“HFIAA”) amended Section 16(a) of the Exchange Act, eliminating the longstanding exemption for D&Os of FPIs. However, the SEC has exempted D&Os of FPIs meeting certain conditions tied to qualifying jurisdictions and qualifying regulations from the reporting obligations of Section 16(a).
Background
A foreign issuer generally qualifies as an FPI under U.S. securities laws unless more than 50 percent of its outstanding voting securities are held of record by U.S. residents and certain additional U.S. nexus tests relating to management, assets, or operations are met.
For nearly five decades, FPI insiders were exempt from reporting obligations under Section 16(a), which generally applies to issuers with a class of equity securities registered under Section 12 of the Exchange Act. On December 18, 2025, the HFIAA was signed into law, thereby eliminating this longstanding exemption for D&Os of FPIs effective March 18, 2026. Like their counterparts at domestic issuers, D&Os of FPIs with a class of equity securities registered under Section 12 of the Exchange Act are now generally subject to Section 16(a) reporting obligations.
However, the HFIAA also added Section 16(a)(5) to the Exchange Act, providing the SEC with the authority to establish exemptions by rule, regulation, or order if the SEC determines that the laws of a foreign jurisdiction apply substantially similar requirements. On March 5, 2026, the SEC issued an order providing D&Os of certain FPIs exemptive relief from Section 16(a) reporting obligations (the “SEC Exemptive Order”).
Key Takeaways for FPIs and Their Directors and Officers
Following the amendments to the Exchange Act through HFIAA, D&Os of FPIs are now generally required to file reports on Forms 3, 4, and 5 to disclose their beneficial ownership of the issuer’s equity securities and any subsequent transactions or changes therein. To reflect the requirements of the HFIAA, the SEC adopted amendments to the Exchange Act Rules 3a12-3(b) and 16a-2, and to Forms 3, 4, and 5.
The Section 16(a) reporting obligations, however, do not apply if the requirements for an exemption under the SEC Exemptive Order are satisfied. Based on the authority given in Section 16(a)(5), the SEC exempted from the reporting obligations of Section 16(a), and rules related to that provision, the D&Os of any FPI that is (i) incorporated or organized in a qualifying jurisdiction, and (ii) subject to a qualifying regulation. The qualifying jurisdiction and the qualifying regulation need not be the same. Further, D&Os seeking to rely on an exemption must comply with the applicable qualifying regulation and the relevant filing must be made available in English to the general public within no more than two business days of its public posting.
The SEC Exemptive Order currently recognizes the following qualifying jurisdictions and qualifying regulations:
Qualifying Jurisdiction |
Qualifying Regulation |
Canada |
Canada’s National Instrument 55-104 – Insider Reporting Requirements and Exemptions (supported by National Instrument 55-102 – System for Electronic Disclosure by Insiders (SEDI) and companion policies) |
Chile |
Articles 12, 17, and 20 of the Chilean Securities Market Law (Ley de Mercado de Valores, Ley No. 18,045) and General Rule (Norma de Carácter General) No. 269 |
European Economic Area |
Article 19 of the European Union Market Abuse Regulation (Regulation (EU) No. 596/2014, as amended by Regulation (EU) No. 2024/2809) (including, as applicable, implementing legislation and regulations adopted by the European Union’s member states) and as incorporated into the domestic law of each European Economic Area state |
Republic of Korea |
Article 173 of the Republic of Korea Financial Investment Services and Capital Markets Act and Article 200 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act |
Switzerland |
Article 56 of the Listing Rules and implementing directives of SIX Swiss Exchange as approved by the Swiss Financial Market Supervisory Authority |
United Kingdom |
Article 19 of the United Kingdom Market Abuse Regulation (Regulation (EU) No. 596/2014), as it forms part of United Kingdom domestic law pursuant to the European Union (Withdrawal) Act 2018 |
What Did Not Change
The HFIAA did not extend Section 16(a) reporting obligations to shareholders of FPIs who are not D&Os. Those shareholders therefore remain exempt from Section 16(a) reporting obligations.
D&Os of FPIs remain exempt from the short-swing profits rule under Section 16(b) and the short sale prohibition under Section 16(c).
Looking Ahead
Effective March 18, 2026, FPIs and their D&Os should determine whether the FPI qualifies for an exemption under the SEC Exemptive Order and ensure compliance with either (i) the applicable qualifying regulation and the conditions of the SEC Exemptive Order or (ii) the Section 16(a) reporting requirements.
For More Information
The German, International, and Corporate, Securities, and M&A practices at Tarter Krinsky & Drogin are actively monitoring changes to U.S. securities laws and related developments in this field. Please contact a member of our team to discuss how the HFIAA, the SEC Exemptive Order, and other securities law requirements might affect your business and how we can help navigate cross-border transactions and securities law compliance.
