Section 16 obligations now apply to foreign private issuers, expanding scope

Foreign private issuers (FPIs) along with their directors and officers historically have not been subject to the same insider reporting regulations as domestic public companies in the United States. However, a significant shift is set to take place on March 18, 2026, as new obligations will be enforced.

The Holding Foreign Insiders Accountable Act (HFIAA), signed into law on December 18, 2025, as part of the National Defense Authorization Act for the fiscal year 2026, is at the heart of this change. This legislation amends Section 16(a) of the Securities Exchange Act of 1934, extending the requirement for directors and executive officers of FPIs with a class of equity securities registered under Section 12 of the Exchange Act to adhere to the same insider reporting rules as their U.S. counterparts. Come March 2026, these covered FPI insiders must publicly disclose their equity ownership and transactions through the submission of Forms 3, 4, and 5, aligning them with standard U.S. issuer reporting practices.

This adjustment is part of a broader initiative by the Securities and Exchange Commission (SEC) to streamline insider disclosure protocols between domestic and foreign issuers, ultimately aiming to bolster market transparency and accountability across the board.

The upcoming changes mean that as of March 18, 2026, directors and executive officers of applicable FPIs will need to report their beneficial ownership of the issuer’s equity securities and any related transactions by utilizing Forms 3, 4, and 5 on the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system – a significant shift that marks the beginning of heightened compliance requirements for FPIs and their insiders.

The HFIAA serves as a key piece of legislation that aims to ensure foreign private issuers play by the same rules as U.S. companies, fostering a more level playing field and improved consistency in regulatory standards. It signifies a step towards closing regulatory gaps that previously existed between domestic and foreign issuers, with the overarching goal of reinforcing market integrity and investor protection.

By enforcing these expanded obligations on FPIs, the SEC is strengthening its oversight and aiming to instill greater confidence and trust in the U.S. securities market. This move represents a significant development in the realm of securities law and underlines the SEC’s commitment to upholding the highest standards of corporate governance and transparency, irrespective of a company’s country of origin.