Expanded Insider Reporting for Foreign Private Issuers: Preparing for Section 16 Compliance

Recent legislative and regulatory developments mark a significant change for foreign private issuers listed in the United States. Historically, directors and officers of foreign private issuers were exempt from insider reporting obligations under Section 16 of the Securities Exchange Act of 1934. That exemption will soon end.

As part of broader legislative action adopted at the end of 2025, directors and officers of foreign private issuers will become subject to Section 16 reporting requirements beginning in 2026. This change introduces new compliance obligations for individuals and companies that previously operated outside the U.S. insider reporting framework.

This blog summarizes the legal change eliminating the Section 16(a) exemption for foreign private issuer directors and officers, explains the scope of the new reporting obligations, and highlights practical considerations for foreign issuers preparing for implementation.

Background: Section 16 and the Historical FPI Exemption

Section 16 of the Exchange Act imposes reporting obligations on directors, officers, and certain beneficial owners of equity securities registered under Section 12. These provisions are designed to promote transparency around insider ownership and transactions.

For many years, directors and officers of foreign private issuers were excluded from Section 16(a) reporting pursuant to Exchange Act Rule 3a12 3. Under this framework, foreign private issuers remained subject to U.S. disclosure requirements, but their insiders were not required to file Forms 3, 4, or 5.

That longstanding exemption was statutory and regulatory in nature and reflected the SEC’s historical approach to balancing U.S. investor protection with deference to foreign regulatory regimes.

Legislative Changes Eliminating the Exemption

In December 2025, Congress enacted the Holding Foreign Insiders Accountable Act (“HFIAA”) as part of the Fiscal Year 2026 National Defense Authorization Act. This legislation amended Section 16(a) of the Exchange Act to remove the exemption for directors and officers of foreign private issuers.

As a result, beginning March 18, 2026, directors and officers of foreign private issuers will be required to comply with Section 16(a) insider reporting obligations in the same manner as insiders of U.S. domestic issuers.

The amendment does not extend all aspects of Section 16 to foreign private issuers. Notably, the short swing profit liability provisions of Section 16(b) and the short sale restrictions under Section 16(c) do not apply to foreign private issuer directors and officers under the new law. In addition, beneficial owners holding more than ten percent of an issuer’s equity securities remain exempt.

Scope of the New Reporting Obligations

Beginning in March 2026, foreign private issuer directors and officers must file insider ownership reports with the SEC through the EDGAR system.

These filings include Form 3 to report initial beneficial ownership, generally required upon the effective date of the rule or upon becoming a director or officer. Form 4 must be filed within two business days following most reportable transactions involving equity securities. Form 5 remains available for certain deferred or previously unreported transactions and must be filed within forty five days after the issuer’s fiscal year end.

These requirements apply regardless of whether the individual resides outside the United States or conducts transactions through non U.S. brokerage accounts.

SEC Authority to Grant Exemptions

The HFIAA provides the SEC with authority to grant exemptions from Section 16(a) on a conditional or unconditional basis if the Commission determines that a foreign jurisdiction imposes substantially similar reporting obligations.

At this stage, no such exemptions have been adopted. Unless and until the SEC exercises this authority through rulemaking or orders, foreign private issuer directors and officers should assume that full Section 16(a) reporting compliance will be required.

Practical Implications for Foreign Private Issuers

The elimination of the Section 16(a) exemption has meaningful compliance and operational implications for foreign private issuers. Companies should identify all directors and officers who will be subject to reporting, ensure that EDGAR filing credentials are obtained well in advance of the effective date, and establish internal procedures for monitoring transactions and coordinating timely filings.

Foreign private issuers should also review their internal trading policies, onboarding materials, and communications with directors and officers to reflect the new reporting regime. Coordination with legal counsel, brokers, and compliance teams will be essential to avoid late filings and potential enforcement exposure.

Final Thoughts

The extension of Section 16(a) reporting obligations to foreign private issuer directors and officers represents a meaningful shift in the U.S. regulatory landscape. While the change does not impose short swing liability or short sale restrictions, it significantly expands disclosure obligations for individuals who previously operated outside the Section 16 framework.

Foreign private issuers should treat the March 2026 effective date as a firm compliance deadline and begin preparing now. Early planning and process development will be critical to ensuring smooth implementation and avoiding reporting missteps.

If you would like to discuss how the new Section 16 requirements may affect a foreign private issuer or its directors and officers, our team at Crestfield is available to assist.