Buried in the defense spending bill adopted in December 2025 is a provision amending Section 16(a) to extend insider reporting obligations to certain insiders of foreign private issuers (FPIs)[1]. The provision, dubbed the Holding Foreign Insiders Accountable Act (HFIAA), will require officers and directors of FPIs (but not 10% owners) to report their trades to the SEC on Forms 3, 4 and 5, in the same manner currently required of domestic companies’ insiders under the Securities Exchange Act of 1934 (Exchange Act).
What Is Section 16?
The primary purpose of Section 16 of the Exchange Act is to minimize advantages that certain officers and directors have when trading in their own company’s stock. Insider trading was prevalent in the 1930s when Section 16 was enacted as part of the Exchange Act.
Section 16(a) requires insiders to report their trades to the SEC by filing Forms 3, 4, and 5. These forms enable the SEC and market participants to track transactions by company insiders. In addition, insiders are required to disgorge any profit made when trading in their company’s stock if they made a purchase and sale within six months of each other (known as a “short-swing” transaction). For these purposes, an insider of domestic companies includes officers, directors, and 10% beneficial owners of any class of a publicly traded company’s equity securities.
Prior to the enactment of the HFIAA, Exchange Act rules specifically exempted insiders of FPIs (i.e., officers, directors, and 10% or greater stockholders) from the reporting obligations under Section 16(a).[2] However, FPIs were still required to disclose beneficial ownership of certain insiders in their annual reports on Form 20-F. Notwithstanding the Section 16 exemption for insiders of FPIs, such insiders have been subject to the beneficial ownership reporting requirements under Section 13 of the Exchange Act if their ownership exceeded 5% of a public company’s voting securities.
Section 16(a) reports are the responsibility of the actual officer, director, or 10% beneficial holder. However, most companies make the filings on behalf of their own officers and directors. In fact, it is common for officers and directors to authorize individuals at their companies to make the filings on their behalf through powers of attorney. One reason for this practice is the short deadline for Section 16 filings — usually within two business days of the trade. With the enactment of the HFIAA, the reporting obligations are now extended to officers and directors of FPIs.
At first glance, Section 16(a) filings appear straightforward. However, SEC rules define both “purchases” and “sales” broadly, which can raise difficult questions about how or whether to report a certain transaction, especially when the transaction involves convertible securities or derivatives.
Scope of Section 16(a) for FPI Insiders
Although officers and directors of FPIs will become subject to the reporting requirements of Section 16(a), the HFIAA does retain some existing exemptions for FPIs.
First, beneficial owners of more than 10% of an FPI’s registered equity securities will remain exempt from Section 16 obligations and will not be required to report their trades. However, 10% holders are still subject to the separate reporting requirements of Sections 13(d) and 13(g) of the Exchange Act, consistent with current law.
In addition, directors and officers of FPIs will not be required to disgorge profits earned from any “short-swing” transactions. This means FPI insiders will not be required to disgorge profits earned from opposite-way trades within six months of each other.
The HFIAA grants the SEC discretionary authority to exempt FPI insiders from Section 16(a) reporting requirements where foreign law imposes “substantially similar” obligations. It remains to be seen whether and how the SEC will exercise this authority.
Timing
Reporting obligations for FPI directors and officers will begin on March 18, 2026, as confirmed by the SEC.
Existing directors and officers of FPIs must file an initial report on Form 3 with the SEC on March 18. This initial report must disclose all equity securities of the FPI beneficially owned by the insider. Any person who becomes an officer or director of an FPI on or after March 18, 2026, must file a Form 3 within 10 days of assuming the role.
Meanwhile, it is unclear whether the SEC will require FPIs to disclose late Section 16(a) filings as currently required under Item 405 of Regulation S-K for domestic issuers.
Next Steps
FPIs should take the following steps to prepare for the commencement of these Section 16(a) filing requirements:
- As soon as possible, begin evaluating who will be deemed “officers” for Section 16(a) purposes. The term “officer” is defined in Exchange Act Rule 16a-1(f). This definition overlaps significantly with that of “executive officer” in Rule 3b-7, which FPIs already apply in their clawback policy disclosure. Despite this overlap, FPIs and their boards should refresh their analysis, since the definitions are based on facts and circumstances unique to the FPI’s own operations and each individual’s functions.
- Prior to the March filing deadline, enroll their Section 16 insiders in EDGAR Next, the SEC’s filing system for issuers and individuals. Each officer or director is required to have his or her own EDGAR Next account to submit his or her respective filings. Obtaining EDGAR Next access can take time, and with close to 1,000 FPIs subject to the SEC’s periodic reporting rules, the number of insiders applying for EDGAR Next access will be significant.
- Identify and train employees who will be responsible for Section 16 compliance regarding the proper controls and procedures that are crucial to avoid late filings. Further, issuers should review their controls and procedures governing equity awards, preclearance policies for transactions in company securities, and their insider trading policies.
- Educate officers and directors about their new filing obligations. Officers and directors of FPIs should understand their responsibility for notifying the proper persons within the company of any changes to their beneficial ownership of company securities to ensure accurate and timely reporting.
[1] Foreign private issuers are companies with securities listed in a U.S. exchange that benefit from accommodations and exemptions that provide partial relief from the SEC disclosure and filing requirements.
[2] See Rule 3a12-3(b) promulgated under the Exchange Act.
