On December 18, 2025, President Trump signed into law the National Defense Authorization Act for Fiscal Year 2026, which contained a provision eliminating certain reporting exemptions for SEC-registered companies qualifying as foreign private issuers (“FPIs”). Section 8103 of the bill, the “Holding Foreign Insiders Accountable Act” (the “Act”), amends Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and in so doing imposes Section 16(a) insider trading reporting requirements on directors and officers1 of FPIs. The amendment takes effect on March 18, 2026.
Officers and directors of FPIs with equity securities registered with the SEC have historically been exempt from Section 16 beneficial ownership disclosure requirements and related rules pursuant to Exchange Act Rule 3a12-3(b), differentiating them from officers and directors of domestic entities.
The Act reverses parts of Rule 3a12-3(b) and mandates that insiders of FPIs whose securities are listed on U.S. exchanges and registered under Exchange Act Section 12(b) or are registered pursuant to Section 12(g) of the Exchange Act comply with the same insider trading disclosure requirements as the officers and directors of domestic issuers. Consequently, as of March 18, 2026 they will need to file with the SEC:
- Initial Ownership Reports (Form 3) within ten days of becoming an insider (or by March 18, 2026 for officers and directors of existing FPIs);
- Transaction Reports (Form 4) within two business days of any purchase, sale, gift, or acquisition of the FPI’s listed equity; and
- Annual Reports (Form 5) within 45 days of the FPI’s fiscal year-end for any missed or deferred transactions.
FPI insiders previously enjoyed exemptions from these requirements. Fortunately for FPI insiders, the Act does not subject them to the short-swing profit disgorgement provision of Section 16(b) of the Exchange Act or the short sale restrictions of Section 16(c) of the Exchange Act, which provisions continue to apply to domestic registrants. Previously proposed legislation in this area did not contain these exemptions for FPIs. It is also important to note that the Act does not impose disclosure obligations on holders of more than 10% of securities of FPIs (which shareholders are not also officers or directors), again, unlike domestic companies.
There is a potential exemption from these new obligations found in Section 8103(b)(1)(D) of the Act which grants the SEC authority to exempt from these reporting obligations officers and directors of companies in jurisdictions which already impose “substantially similar requirements.” The exact nature of this exemption will depend on the SEC’s rule making process, however, so at this time its scope is unclear. Among other issues, it is not clear which other countries impose such “similar requirements,” so that officers and directors of companies formed in such countries would be eligible for the exemption. At this point, it seems that Canada, the UK and the EU have similar disclosure requirements, but regardless, this issue will not be resolved until the SEC acts and formulates the exemption. Once the Act takes effect, the SEC will be required to issue final regulations within 90 days.
Failure to comply with the newly imposed reporting obligations under Section 16(a) of the exchange act could result in SEC enforcement actions and civil penalties against the FPI insiders. This amendment seems to be part of an on-going regulatory trend to enhance the regulation of non-U.S. issuers in the U.S. public securities markets. For instance, earlier this year the SEC issued a concept release seeking comment on potentially narrowing the categories of companies that could qualify as an FPI in the first place.2
Note that these filings will be required to be made via the SEC’s electronic EDGAR filing system, and consequently affected parties will need to obtain the necessary EDGAR filing credentials in advance of the March filing deadline.
1 Directors are defined in Section 3(a)(7) of the Exchange Act as, “any director of a corporation or any person performing similar functions with respect to any organization, whether incorporated or unincorporated,” and officers are defined in Rule 16a-1 under the Exchange Act to include primarily “an issuer’s president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice-president of the issuer in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the issuer.”
2 Refer to our prior newsletter on this topic here: The SEC Seeks Public Comment on its Definition of Foreign Private Issuer.
