SEC establishes new rules under the Holding Foreign Insiders Accountable Act

The Securities and Exchange Commission (SEC) recently enacted final rules to enforce the Holding Foreign Insiders Accountable Act (HFIAA) that was put into effect on February 27, 2026. The HFIAA, as detailed in the Winter 2025/2026 Quarterly Newsletter, amends Section 16(a) of the Securities Exchange Act of 1934, which mandates that directors and officers of foreign private issuers (FPIs) must adhere to the Section 16 beneficial ownership reporting requirements starting March 18, 2026, known as the FPI Compliance Date.

The Final Rule modifies certain rules and forms under the Exchange Act to accommodate the new requirements. Notably, it clarifies that directors and officers, excluding beneficial owners of more than 10% of an FPI’s equity securities (>10% Owners), must fulfill the Section 16(a) beneficial ownership reporting obligations. Furthermore, the Final Rule amends Forms 3, 4, and 5 under the Exchange Act to make them compatible for non-U.S. issuers and reporting individuals.

In addition to these amendments, the Final Rule includes technical changes to the General Instructions of Forms 3, 4, and 5 to reflect updates to contact information for EDGAR support and the mailing address for submitting paper copies of beneficial ownership reports. Directors and officers of FPIs that transitioned to public companies before the FPI Compliance Date are required to submit their Initial Statement of Beneficial Ownership of Securities on Form 3 on the FPI Compliance Date and comply with subsequent filing requirements.

To prepare for the FPI Compliance Date, FPIs should ensure that all directors and officers have access to EDGAR through EDGAR Next, with individuals needing to submit an application for EDGAR access on Form ID if they do not already have access codes. Moreover, FPIs are urged to review their transaction reporting processes to guarantee compliance with beneficial ownership reporting deadlines. This involves receiving timely reports from directors and executive officers, as well as their brokers or financial institutions handling transactions, to ensure that reports on changes in beneficial ownership are submitted promptly.

The Securities and Exchange Commission requires filers to submit Form ID well in advance of any anticipated filing, with an average turnaround time of six business days for reviewing Form IDs as of December 22, 2025. Individual filers must include a notarized power of attorney with their Form ID if a third party is submitting the form on their behalf or acting as an initial account administrator on their EDGAR Next account.

In essence, the Final Rule under the HFIAA introduces crucial changes for FPIs in terms of beneficial ownership reporting requirements, necessitating adherence to new regulations to ensure compliance with the revised rules under the Exchange Act. Without exemption for beneficial owners of over 10% of an FPI’s equity securities, directors and officers must now fulfill their reporting duties explicitly outlined in the Final Rule.