New U.S. SEC Reporting Requirements for Directors and Officers of Foreign Private Issuers
Executive Summary
Recent U.S. legislation has fundamentally changed the reporting obligations for directors and officers of Foreign Private Issuers (“FPIs”) registered with the U.S. Securities and Exchange Commission (“SEC”). Effective March 18, 2026, directors and officers of FPIs will be required to publicly report their ownership of, and transactions in, the issuer’s equity securities to the SEC under Section 16(a) of the U.S. Securities Exchange Act of 1934. This memo summarizes the key aspects of the new requirements, their implications, and recommended next steps for affected companies and individuals
Background
Historically, FPIs were exempt from the insider reporting requirements of Section 16(a) that apply to U.S. domestic companies. Instead, FPIs were subject only to their home jurisdiction’s insider reporting rules and the share ownership disclosure requirements in annual reports on Form 20-F. The new legislation, known as the “Holding Foreign Insiders Accountable Act,” was enacted as part of the U.S. National Defense Authorization Act (“NDAA”) and signed into law on December 18, 2025. The new reporting regime will take effect on March 18, 2026, 90 days after enactment. However, it should be noted that the NDAA requires the SEC to issue final regulations no later than that date. Consequently, certain changes or even exemptions may apply once the final regulations are issued.
Who Is Affected?
Directors and Officers: The new requirements apply to directors and executive officers of FPIs with SEC-registered equity securities.
10% Owners: Unlike U.S. domestic companies, beneficial owners of more than 10% of a class of registered equity securities of an FPI are not subject to Section 16(a) reporting unless they also serve as a director or officer.
Definition of Officers: The definition of “officer” aligns with those subject to SEC clawback rules, including the president, principal financial officer, principal accounting officer (or controller), VPs in charge of principal business units, and any officer or person with policy-making functions.
Reporting Requirements
Forms to File
Form 3: Initial statement of beneficial ownership, due within 10 days of becoming a director or officer (or by the effective date of registration for new issuers).
Form 4: Report of changes in beneficial ownership, due within two business days of the transaction.
Form 5: Annual statement for certain exempt transactions or missed filings, due within 45 days after the company’s fiscal year end.
Scope: Reports must be filed in English via the SEC’s EDGAR Next system and cover all equity securities and derivatives beneficially owned, including equity compensation.
Deadline: The two-business-day deadline for Form 4 filings is strict and applies to virtually all changes in ownership, regardless of transaction size or the market where the trade occurred.
Exemptions and Special Considerations
Jurisdiction-Specific Exemptions: The SEC may exempt individuals or transactions if the laws of a foreign jurisdiction impose “substantially similar requirements.” The process and scope for such exemptions remain uncertain, and companies should prepare to comply unless and until an exemption is granted.
Short-Swing Profit Rule: The new rules do not subject FPI insiders to Section 16(b) “short-swing” profit disgorgement or Section 16(c) anti-shorting provisions, which remain applicable only to U.S. domestic issuers.
Deputized Directors: Entities that designate individuals to serve as directors may themselves be deemed directors for Section 16(a) purposes.
Compliance and Enforcement
EDGAR Next Registration: Directors and officers must obtain EDGAR Next filing codes. The process can take several weeks and requires notarization of Form ID.
Company Assistance: While the filing obligation is personal, companies typically assist directors and officers in obtaining EDGAR codes and preparing filings.
Consequences of Non-Compliance: The SEC and federal banking agencies may issue cease-and-desist orders, seek injunctions, impose civil penalties, or recommend criminal prosecution for willful violations. The SEC may also pursue actions against third parties aiding or abetting violations .
Next Steps and Recommendations
Identify Affected Individuals: Determine which directors and officers will be subject to the new reporting requirements.
Obtain EDGAR Next Access: Begin the process of registering all relevant individuals with the SEC’s EDGAR Next system immediately.
Review Internal Policies: Update insider trading and reporting policies to ensure timely internal reporting and compliance.
Coordinate with Counsel: Work with U.S. securities counsel to ensure correct and timely filings and to monitor for potential exemptions.
Monitor SEC Guidance: Stay alert for further SEC rulemaking or exemptive orders regarding jurisdiction-specific relief.
Conclusion
The new Section 16(a) reporting regime represents a significant change for FPIs and their insiders. Timely preparation and proactive compliance are essential to avoid regulatory risk and ensure a smooth transition.
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