Section 16 reporting for foreign private issuer insiders
Buried inside the annual defense spending bill, the National Defense Authorization Act, is the “Holding Foreign Insiders Accountable Act,” which was signed into law by President Donald Trump on December 18, 2025. This new law requires the Securities and Exchange Commission (SEC) to eliminate the exemption under Exchange Act Rule 3a12-3(b) and, for the first time, require insiders of foreign private issuers (FPIs) to comply with Section 16(a) reporting obligations.
The SEC now has 90 days from enactment to amend its rules to implement this statutory directive, which means FPIs will be subject to Section 16 reporting as early as March 18. The new law does not extend the Section 16(a) filing requirements to beneficial owners of 10% of an FPI, as is required for 10% shareholders of US companies, nor does it require Section 16(b) to apply to insiders of FPIs like it does to insiders of US companies. That said, it is possible the SEC could elect to expand the coverage of the filing requirements to 10% holders and/or extend the Section 16(b) short-swing profit liability provisions to FPIs as well. The legislation allows the SEC to put in place exemptions to this new requirement if the SEC determines that a foreign jurisdiction imposes “substantially similar requirements.” It is not yet known whether the SEC will adopt such exemptions or which jurisdictions they might cover.
For more information, see this TheGovernanceBeat.com blog, this TheGovernanceBeat.com blog and this TheCorporateCounsel.net blog.
ISS issues 2026 benchmark policy updates
ISS announced final updates to its 2026 benchmark proxy voting policies, which will generally apply to shareholder meetings taking place on or after February 1, 2026. See the full policy updates document, which details all the changes (shown in redline), or ISS’ executive summary. The updates relate principally to director and executive compensation and corporate governance matters. The 2026 policies include significant changes to ISS’ approach to environmental and social shareholder proposals, replacing a presumption of support for several frequent topics with a case-by-case approach. For information and insight, see this Cooley alert, this TheGovernanceBeat.com blog and this TheGovernanceBeat.com blog.
Glass Lewis issues 2026 US Benchmark Policy Guidelines
Glass Lewis released its 2026 US Benchmark Policy Guidelines and Shareholder Proposals & ESG-Related Issues Guidelines, which will apply to shareholder meetings held on or after January 1, 2026. See this Cooley alert for a summary of the key developments, including insight on Glass Lewis’ response to the SEC’s decision to cease issuing Rule 14a-8 no-action letters for the 2026 proxy season (other than under Rule 14a8(i)(1)) and changes regarding arbitration provisions. For additional information, see this The GovernanceBeat.com blog, this TheGovernanceBeat.com blog and this Governance Intelligence article.
Executive order on proxy advisors
The Trump administration issued this executive order (and a related fact sheet) aimed at proxy advisory firms, specifically ISS and Glass Lewis. The executive order directs several US federal agencies – the SEC, Federal Trade Commission and Department of Labor – to increase oversight of the firms and investigate them for violating antitrust, unfair competition and deceptive practices laws. The order notes that ISS and Glass Lewis account for more than 90% of the proxy advisory market and claims that they “regularly use their substantial power to advance and prioritize radical politically-motivated agendas,” specifically highlighting environmental, social and governance (ESG) and diversity, equity and inclusion (DEI), with the order including examples, such as the firms’ support for shareholder proposals requiring companies to reduce greenhouse gas emissions or conduct racial equity audits. For insights on the order, see this TheGovernanceBeat.com blog, this TheCorporateCounsel.net blog, this Responsible Investor article, this ESGDive article and this ESGtoday article.
New California law limits recouping payments from employees upon termination
California Assembly Bill 692 could dramatically affect many common techniques used by employers to recover funds from employees upon termination. For employment contracts entered into on or after January 1, 2026, the new law generally prohibits inclusion of (or requiring a worker to execute as a condition of employment or work relationship a contract that includes) any provision requiring the worker to pay an employer a debt if the worker’s employment or work relationship with a specific employer terminates. There are exceptions to the law’s general prohibitions, but the new law may restrict many currently common employment practices. For example, it appears that it will be impermissible to require repayment of a sign-on bonus without compliance with one of the specific exceptions. For more information, see this Cooley alert, this Cooley alert and this TheCorporateCounsel.net blog.
Final IRS regulations limit scope of stock buyback excise tax
The Department of the Treasury and IRS released final regulations that became effective on November 24, 2025, and provide guidance on the application of the 1% excise tax on stock buybacks by public companies. Under proposed regulations issued on April 12, 2024, the excise tax could have applied to certain transactions not commonly regarded as stock buybacks. The final regulations substantially narrow the scope of the excise tax by generally exempting such transactions from the excise tax, which should also have the result of reducing the reporting burden for many public companies. For details on the narrowed scope, see this Cooley alert.
European Union reaches agreement to simplify sustainability reporting
The European Council and European Parliament’s Legal Affairs Committee agreed on terms to simplify the directives on corporate sustainability reporting – Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) – by reducing the reporting burden and limiting the trickle-down effect of obligations on smaller companies.
The terms include, among other things, reduced applicability thresholds, risk-based due diligence and elimination of the climate transition plan requirement.
The revised agreement, once formally adopted, would remove approximately 90% of companies from the CSRD’s scope and 70% of companies from the CSDDD’s remit, and has broad implications for EU and non-EU businesses affecting whether they are covered by the laws, compliance timelines, and obligations for those that remain in scope. For more information on the revisions and key takeaways, see this Cooley alert, this Responsible Investor article, and this ESGDive article. For history on the legislation, see this ESGtoday article and this ESG News article.
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